World Economic Forum Debuts Framework for Central Bank Digital Currency

Ed.'s note: Once central banks have their cryptocurrency infrastructure in place it means every financial transaction you make will be recorded on the blockchain. Not a single purchase or sale down to the smallest increment will remain hidden. One country after another are moving rapidly to cashless societies. It is being done gradually easing populations into cashless societies so as to not arouse natural suspicions and to not create anymore financial instability than necessary.
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Source: Cointelegraph

The World Economic Forum (WEF) — together with some of the world's major central banks — has created a central bank digital currency (CBDC) policymaker toolkit.

According to an announcement on Jan. 22, the toolkit is the WEF's attempt to help policy-makers understand whether deploying a CBDC would be advantageous and guide them through its design.

The WEF collaborated with regulators, central bank researchers, international organizations and experts from over 40 institutions to develop the framework. The head of blockchain and distributed ledger technology (DLT) at the World Economic Forum Sheila Warren explained:

"Given the critical roles central banks play in the global economy, any central bank digital currency implementation, including potentially with blockchain technology, will have a profound impact domestically and internationally. [...] It is imperative that central banks proceed cautiously, with a rigorous analysis of the opportunities and challenges posed."

Bank of Thailand Governor Veerathai Santiprabhob said that the institution made good progress on its own CBDC implementation, called Project Inthanon. Recently, reports started circulating that Hong Kong and Thailand's central banks have stepped closer to implementing a joint CBDC for cross-border payments. He explained how the toolkit is useful for the continued development of the bank's digital currency:

“From our experience, we need to identify tradeoffs between benefits from the use cases and their associated risks across different dimensions. This is where the Policymaker Toolkit could usefully provide an actionable framework for CBDC deployment."

Central Bank of Bahrain Governor Rasheed M. Al Maraj announced that the institution that he is guiding will pilot the WEF's toolkit, saying, "We hope that it will be an opportunity to learn, grow and to adapt to the changes in the Fourth Industrial Revolution."

The pros and cons of a digital currency

The framework recognizes that a CBDC — among other things — can improve the cost and speed efficiencies of cross-border interbank payments, as well as reduce settlement and counterparty risks. The WEF notes that a digital currency can also enhance financial data transmission and reporting, and improve traceability compared to physical cash.

The paper admits that, before considering a CBDC, other solutions to economic friction should be considered. A digital currency may not add value in domestic interbank payments where an efficient system is already present.

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