Bank for International Settlements (BIS) Innovation Hub’s new head Cecilia Skingsley on Monday said central bank digital currencies (CBDC) will never have full interconnectedness due to cross-border limitations.
Skingsley highlights the crypto market recovery seen in 2023 despite last year’s turmoil such as the collapse of the crypto exchange FTX and hopes the industry will learn from these failures.
BIS Warns About Limitations of CBDC
Cecilia Skingsley, head of BIS Innovation Hub, warned central bank’s efforts to push for central bank digital currencies will face geopolitical limits, reported Reuters on February 6.
Skingsley noted crypto market recovery is pushing crypto prices higher, increasing investors’ sentiment on cryptocurrencies. Despite the last year’s turmoil, the crypto market has survived. She believes a new outlook on CBDC and the crypto market has emerged after turmoil.
“I would assume that the industry will learn from these failures and they will come up with new things.”
Cecilia Skingsley agrees that CBDCs make currencies more high-tech, easier, and cheaper to send to other countries. However, it will divide countries based on their CBDC and not all countries in the world will be prepared to cooperate fully with all the other countries in the world. CBDCs will never have interconnectedness due to cross-border limitations.
She hinted at the low acceptance of some CBDCs, while others such as Bank of England head Andrew Bailey have raised doubts on whether their CBDC will be accepted or not in other countries.
“That opens up the question of how do you maintain public policy objectives that we think are important – namely trust in the money system.”
Crypto Is the Key
While 11 countries have already launched a CBDC and over 100 other countries exploring them, crypto is likely the only solution for cross-border payment. The move comes as physical cash use falls globally and authorities look to maintain their money-printing powers from threats such as Bitcoin and ‘Big Tech’ firms.
However, Bitcoin price rise of over 40% last month has shown the resilience of the crypto market. Bitcoin price is currently trading at $22,879, down over 1% in the last 24 hours ahead of U.S. Fed Chair Jerome Powell’s speech.
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