- At the World Economic Forum, a group of 40 central banks established a legal framework for the assessment, design and issuance of a CDBC.
- The Policy Maker Toolkit provides a set of guidelines for determining the suitability of using distributed ledger technology, governance models, privacy and security, and financial inclusion.
At the annual meeting of the World Economic Forum in Davos, Switzerland, the Forum team for Blockchain and Distributed Ledger Technology presented the result of a year-long consultation with researchers, experts in blockchain technology and more than 40 institutions and central banks from around the world. The team made a proposal for a legal framework providing tools to assess the issuance of a CBDC.
Opposing Bitcoin: What is the Policy Maker Toolkit?
The Policy Maker Toolkit was designed by the World Economic Forum to help central banks around the world determine whether a CBDC (central bank digital coin) is a viable option within their local economy. In addition, the Policy Maker Toolkit has the necessary content and steps, created by academics and experts in the blockchain area, to properly issue a CBDC.
Thus, the international organization recognizes the importance of Bitcoin and the cryptocurrencies industry in the global economic spectrum. In particular, the World Economic Forum’s proposal will allow interested banking institutions to stay in the race for CBDCs, which already has a strong competitor in China’s digital Yuan.
World Economic Forum’s Head of Technology for Distributed Ledger and Blockchain, Sheila Warren, stated that CBDCs have a significant impact on the local and global economy. In addition, Warren stated:
It is imperative that central banks proceed cautiously, with a rigorous analysis of the opportunities and challenges posed.
The committee has learned from the experience with CBDCs of central banks around the world, and one of the objectives of the Policy Maker Toolkit will be to create a standard. Thus, the issuance of a CBDC will take place in a stable, efficient and inclusive global system. The project leader, Ashley Lannquist, said:
The toolkit is the first of its kind to provide a concise summary of the key issues for policy-makers considering general-purpose or wholesale CBDC.
The World Economic Forum’s proposal will also aim, in substance, to guide central banks in wholesale and retail banking and in international payments. It will serve as a guide for the institutions at each stage, with a detailed description of the individual processes. It will also provide tools for determining whether the application of distributed ledger technology is appropriate, and will include content on governance models, privacy and security, and financial inclusion.
China at the forefront of the CBDC race
As CNF reported, the CBDC race began last year and was marked by two major events. The announcement of the launch of Facebook’s stablecoin was the first catalyst. The Libra project has seen great opposition from international regulators because of the potential risk it could pose to the global economy.
The second important event in this race was the announcement of the launch of the digital Yuan. China’s CBDC is probably the project with the most potential because of its scope and advanced development. Currently, China is testing its CBDC in major cities of the country along with partners and institutions that will determine the best mechanism for its implementation. The World Economic Forum’s proposal could accelerate the development of CBDCs in other parts of the world.