Russia's central bank says pandemic has accelerated regulators' focus on CBDCs

The crisis caused by the epidemic is giving rise to new trends in all aspects of the global economy, including the development of central bank digital currencies. Global financial regulators are paying more attention to central bank digital currencies than ever before.

The COVID-19 pandemic has both shone a light on the fragility of the global financial system and acted as an accelerator of destabilizing trends, including the rise of emerging market sovereign and consumer debt. At an online meeting of the Central Bank Governors Club this week, chaired by Elvira Nabiullina, Governor of the Central Bank of Russia, delegates agreed that the current crisis will have far-reaching consequences.

At the meeting, 26 central bank representatives from Central Asia, the Black Sea region, the Balkans and other places also noted the expansion of e-commerce and digital settlement technology caused by the epidemic. From the perspective of central banks, these trends are prompting financial regulators to pay more attention to central bank digital currencies than ever before.

The vast majority of central banks around the world have reportedly conducted some form of CBDC work, with this growing interest reflected in a continued uptick in official speech on the subject since 2016.

At a follow-up meeting of the Central Bank Governors Club, chaired by Alexey Zabotkin, Deputy Governor of the Bank of Russia, delegates discussed the financial regulator’s stepped-up initiatives on the CBDC front during the pandemic.

As summarized in the minutes of the meeting of the Central Bank of Russia, participants agreed on the need to assess the potential impact of CBDC on the country’s monetary policy and financial stability and to evolve procedures to mitigate cyber risks.

The meeting reportedly brought together not only the central bank governors of the CIS countries, Israel and China, but also representatives of the International Monetary Fund and the World Economic Forum, as well as the Bank for International Settlements.

The latter has both participated in the development of the Global Community Development Centre and conducted detailed analysis of it, while the IMF has collaborated with a number of central banks in joint research on Community Development Centres, and the World Economic Forum has recently focused on developing a framework for Community Development Centres from a transnational governance perspective.

In addition to the challenges that CBDCs pose to international cooperation, standards, monetary policy, and technical interoperability, China’s strong advantage in CBDC development—due to its progress on the digital yuan—also raises geopolitical risks for incumbents of the global financial system, especially the United States.

Source: Cointelegraph