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Central banks join forces to explore the future of digital currencies

LONDON/FRANKFURT (Reuters) – Major central banks are looking to issue their own digital currencies, and the Bank of England and the European Central Bank said on Tuesday, amid a growing debate about the future of money and who controls it.

FILE PHOTO: A small piece of a toy figure, it is to be seen on the representations of the virtual currency to a European flag and on the Facebook Scale the logo in this illustration picture, the 20th October 2019 at the latest. REUTERS/dado Ruvic/Image/File Photo

The central banks of the united Kingdom, the euro area, Japan, Sweden, and Switzerland, will be present to share the experience of a new group, headed by former European Central Bank official, Benoit Coeure, and with the support of the Bank of International Settlements, ” she said.

Central banks around the world, accelerating the pace at which we are looking into the issue their own digital currency, following in the wake of Facebook’s (FB.(O) to push, to launch the Monitor.

Of the major central banks, China has emerged as the front-runner in the drive to create its own digitised money, even though the details of the project are still in short supply.

“The group expects to review … of the economic, functional and technical design choices to be made, including cross-border interoperability, and the sharing of knowledge in the field of emerging technologies,” the central banks said in a statement.

CBDCs are part of the traditional money, but in digital form, and are issued and regulated by the central bank. By contrast, cryptocurrencies, such as bitcoin, are produced by solving complex math puzzles, and are subject to a variety of online communities, rather than by a centralized body.

The common belief is that cryptocurrencies and the CBDCs, to a varying degree, are based upon blockchain technology, a digital ledger, which makes it possible for transactions to be recorded and accessed in real time by multiple parties.

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Last year, the BoE Governor, Mark Carney, took aim at the U. s. dollar as “destabilizing” role in the world economy, and said that the central banks may need to work together in the creation of their own, a substitute reserve currency.

The best solution would be to have a diverse, multi-polar financial system, is something that can be delivered by technology, Carney said.

Facebook has the Scale, it was the most high-profile of proposed digital currency to date, but is confronted by a host of fundamental problems still to address, he added.

Additional reporting Thomas Wilson; Editing by William Schomberg

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