Coronavirus Driving Interest in CBDCs, Say Central Bank Chiefs

A group of central banks says the coronavirus pandemic is a driving force behind growing interest in national digital currencies.

• Governors of 26 central banks met in Russia to discuss the pandemic and its financial ramifications, according to a news release from the Bank of Russia on Friday.
• The "Central Bank Governors’ Club," including institutions from the Central Asia, the Black Sea region and the Balkans, said the pandemic has brought growth to e-commerce and digital settlement technologies.
• As a result, that is one of the reasons financial regulators are increasingly interested in central bank digital currencies (CBDCs).
• Before launching a CBDC, however, a central bank should assess the impact it would have on monetary policy and financial stability, and after that develop procedures to "avoid and mitigate cyber risks," the group agreed.
• Bank of Russia Governor Elvira Nabiullina, who also chaired the meeting, recently said her central bank's fledgling digital ruble project was "promising" and that a pilot scheme was likely late next year.
• The group further said the economic crisis brought by COVID-19 will have "far-reaching global implications," including a higher debt burden and "financial vulnerability."
• Representatives from the International Monetary Fund, the World Economic Forum and the Bank for International Settlements were also present at the meeting.

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