Bank for International Settlements Unveils ‘Game-Changing’ CBDC Blueprint Using Privatized and Controlled Crypto Technology

By The Daily Hodl - 11 months ago - Reading Time: 3 minutes

Bank for International Settlements Unveils ‘Game-Changing’ CBDC Blueprint Using Privatized and Controlled Crypto Technology

The global central bank umbrella organization known as the Bank for International Settlements (BIS) has released a blueprint for the future of central bank digital currencies (CBDCs).

In its new annual economic report, the BIS deploys the language of the blockchain and smart contract industry, saying the tokenization of fiat currency “has great potential” but requires a privately controlled and unified system to make it happen.

“As well as improving existing processes through the seamless integration of transactions, a unified ledger could harness programmability to enable arrangements that are currently not practicable, thereby expanding the universe of possible economic outcomes.

Multiple ledgers – each with a specific use case – might coexist, interlinked by application programming interfaces to ensure interoperability as well as promote financial inclusion and a level playing field.”

In its report, the BIS takes the opportunity to bash the crypto industry’s push to create decentralized systems of value that do not depend on the need to trust banks, politicians and middlemen.

“Crypto and decentralized finance (DeFi) have offered a glimpse of tokenisation’s promise, but crypto is a flawed system that cannot take on the mantle of the future of money.

Not only is crypto self-referential, with little contact with the real world, it also lacks the anchor of the trust in money provided by the central bank.”

The BIS says the banking industry’s attempts to create privatized and centralized blockchain systems to tokenize fiat currency have to date created disjointed “silos” that lack the ability to communicate and work together.

The organization calls its CBDC blueprint “game-changing” and says the key is fostering a system that ensures banks around the world have the ability to seamlessly transfer value between one another.

“The key elements of the blueprint are CBDCs, tokenised deposits and other tokenised claims on financial and real assets. The blueprint envisages these elements being brought together in a new type of financial market infrastructure (FMI) – a ‘unified ledger’.

The full benefits of tokenisation could be harnessed in a unified ledger due to the settlement finality that comes from central bank money residing in the same venue as other claims. Leveraging trust in the central bank, a shared venue of this kind has great potential to enhance the monetary and financial system.”

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Original source: The Daily Hodl