Bank for International Settlements (BIS) releases blueprint for pioneering CBDC using managed cryptography

The Bank for International Settlements (BIS) has unveiled a pioneering CBDC blueprint that demonstrates the use of managed cryptography. With this breakthrough blueprint, BIS is redefining the central bank digital currency landscape and shaping the future.

Pioneer of the Future: BIS Reveals Strategic Plan for Central Bank Digital Currency (CBDC)

BIS, which oversees central banks around the world, has shared its plans for central bank digital currencies (CBDCs). Different countries can use the blueprint to develop and implement his CBDC.

BIS believes that CBDCs can improve central banks' control of monetary policy, increase financial inclusion, and act as a bridge between the traditional and digital economies.

Additionally, BIS believes that CBDCs may provide a secure platform for transactions and help reduce fraud risks.

In its latest annual report, BIS uses terminology commonly used in the blockchain and smart contract industries. Converting traditional currencies into digital tokens has a lot of potential, but it requires a privately controlled, integrated system to work.

Integrated ledgers not only improve existing processes through seamless integration of transactions, but also have the potential to leverage programmatic capabilities to enable arrangements that are currently infeasible, thereby expanding the range of possible economic outcomes. There is a gender.

Multiple ledgers, each with specific use cases, may coexist and be linked together by application programming interfaces to not only ensure interoperability but also promote financial inclusion and a level playing field.

According to BIS report, cryptocurrency companies seek to establish a decentralized system of value that is independent of banks, politicians, and intermediaries. They don't like this approach and are concerned that it will erode trust from the system.

Cryptocurrency and decentralized finance (DeFi) have shown glimpses of the potential of tokenization, but cryptocurrencies are flawed systems and cannot play the future role of money.

Cryptocurrencies are not only self-referential and have little contact with the real world, they also lack the anchor of trust in money provided by central banks. ”

BIS proposes unified approach for CBDC development

BIS says the banking industry's efforts to develop private, centralized blockchain systems to tokenize traditional currencies have resulted in fragmented “silos” that cannot work together. BIS says the lack of integration and coordination between these systems is a major problem.

These fragmented silos mean that different banks are creating their own separate systems. This means users cannot transfer money between different banks and must go through a centralized system instead. This results in a lack of interoperability and can be a major barrier to adoption of these technologies.

The CBDC Blueprint is described as a “game-changing” solution. It is essential that banks around the world create a system that allows them to smoothly transfer value. International value transfers between banks need to be seamless and efficient.

Key elements of the blueprint are CBDCs, tokenized deposits, and other tokenized claims on financial and real assets. The blueprint envisions these elements being integrated into a new type of financial market infrastructure (FMI), or an “integrated ledger.”

The finality of settlement from central bank funds co-located with other claims allows the benefits of tokenization to be fully leveraged on a unified ledger. Leveraging trust in central banks, this type of shared forum has great potential to strengthen monetary and financial systems.

The result could be a more efficient, resilient and transparent payment system. In addition to reducing fraud and cybercrime, it could also make it easier for financial institutions to comply.