The Bank for International Settlements (BIS) has announced a blueprint for the global monetary system, leveraging programmable central bank money.
By unifying tokenised commercial bank assets and real-time transactions, BIS aims to redefine the meaning of financial transactions and economic arrangements worldwide.
As a part of the BIS Annual Economic Report 2023, the blueprint signals a leap into a new era filled with opportunities for the evolution of monetary and economic systems. The new infrastructure integrates tokenised forms of central bank digital currency (CBDC) with commercial bank deposits and other tokenised assets, breaking the boundaries of conventional transactions.
Hyun Song Shin, economic adviser and head of research of the BIS, has described this innovation as a game-changer. He said, “We are at the cusp of another major leap in the monetary and financial system, which will have far-reaching consequences for the economy and society at large.”
Not only will the proposed system provide speed and cost efficiency, but it is also expected to foster innovation, enabling previously impossible transactions. The improvements encompass streamlined securities settlements, tokenised deposits with in-built regulatory checks, and smart contract-enabled credit. By using privacy-protecting technology for potential borrower data sharing, this blueprint could broaden credit access to disadvantaged societal segments.
Central banks across the globe, in conjunction with other public authorities and the private sector, are keen to explore the possibilities presented by this new monetary system. Their aim is to advance cross-border integration and broaden the horizons of monetary systems. As an international hub for cooperation and innovation among central banks, BIS will continue to back these pursuits. More details of the blueprint will be released in the forthcoming full BIS Annual Economic Report and the BIS Annual Report on 25 June.
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