The Bank for International Settlements (BIS) will expand its focus on experiments with Central Bank Digital Currencies (CBDCs) this year through its research and development arm and will also start a new project to monitor stablecoins.
On February 7, the so-called “bank for central banks” in Switzerland announced that the Innovation Hub will “increase the focus” on CBDC in 2023 to improve the payment system.
The bank added that its work schedule for next year also includes “Project Pyxtrial,” which it describes as a new experiment launched by the London branch of the BIS Innovation Hub to enable “systemic monitoring of stablecoins.”
Pyxtrial will develop a platform to monitor stablecoin balances. The bank noted that most central banks lack the tools to “systematically monitor stablecoins and avoid asset-liability mismatches,” before adding:
“The project will investigate various technological tools that can help supervisors and regulators to build a policy framework based on integrated data.”
As for CBDC-related projects, BIS will focus more on retail CBDCs such as the two-tier system called Aurum that will be launched in Hong Kong in July 2022.
It states that CBDC and payment system improvements account for 15 of the 26 projects that have been active over the past few years. It cites awareness from the central bank as a key driver.
“This emphasis reflects the interests and priorities of central banks and G20 countries’ programs to improve cross-border payments.”
Also plans to experiment with retail CBDC distribution through an open API ecosystem in a joint experiment with the Bank of England (BOE) dubbed Rosalind.
In 2023, the #BISinnovationHub will increase the focus on improving the payment system and experimenting with it #CBDCs; on shaping the future of financial regulation and supervision; and on greening and securing the financial sector. Read more: https://t.co/565s9KK1gn pic.twitter.com/izlF1u0Q22
— Bank for International Settlements (@BIS_org) February 7, 2023
In September 2022, BIS concluded a pilot for a platform called mBridge, short for Multiple CBDC Bridge. The central banks of Hong Kong, Thailand, China, and the United Arab Emirates are participating in the pilot in addition to 20 commercial banks from these countries.
related: BIS economists recommend adding TradFi with CBDC to attract users away from crypto
According to the Atlantic Council CBDC tracker, only 11 countries have launched CBDCs all of which are in the Caribbean except Nigeria.
There are 17 countries undergoing the pilot, mostly in Asia, including China, Russia, Kazakhstan, India, South Korea, Thailand, and Malaysia.