New innovation hub will explore central bank digital currencies
Nordic hub will also focus on cybersecurity and green finance
The Bank for International Settlements (BIS) has launched a regional innovation hub with four Nordic central banks that will look at the role of central bank digital currencies (CBDCs).
CBDCs are being explored for use by central banks in place of fiat currency to allow people and companies to make payments using blockchain technology – one day they could even replace bank notes.
The hub is being set up in partnership with Danmarks Nationalbank, Central Bank of Iceland, Norges Bank and Sveriges Riksbank. Other areas of focus will include cybersecurity, green finance, open finance, supervisory and regulatory technology, and next-generation financial market infrastructure.
Benoît Cœuré, head of the BIS Innovation Hub, said: “The Nordic countries' vibrant and innovative fintech environment will serve as a catalyst for key experimentation to help central banks meet the challenges of the digital future.”
BIS said the hub’s launch was part of its plan to expand its global reach, which also also includes the launch of hubs with the Bank of Canada and the Bank of England, as well as the European Central Bank.
The launch of the Nordic hub is the fifth BIS Innovation Hub Centre to be opened in the past two years.
CBDCs for cross-border payments
The BIS recently published a survey examining the possible use of CBDCs for cross-border payments based on 50 central banks. About two-thirds of them are already experimenting with CBDC and conducting pilots, the BIS said, while some central banks are even contemplating multiple CBDCs running on a single system.
The survey also found that a number of central banks are open to allowing tourists and other non-residents to use CBDCs within their own jurisdiction.
Meanwhile, fewer central banks are open to allowing usage of their CBDC by non-residents abroad, because of the risks this may entail for the issuing and recipient economies, the BIS said.
The BIS Innovation Hub was established in 2019 by the BIS to “identify and develop in-depth insights into critical trends in financial technology of relevance to central banks”.