Tokenization efforts continue to thrive with the advent of blockchain technology. As a result, countries seeking solutions that could replace the US dollar in global trade are taking steps in this field. Agustin Carstens, the General Manager of the Bank for International Settlements (BIS), stated that central banks have a responsibility to adapt to the digital age and lead the innovation movement.
During the opening speech of a conference held in Basel, Switzerland on November 8th, Carstens referred to central bank digital currencies (CBDCs) as a fundamental element in this field and discussed the potential risks and challenges in implementing these projects.
One of the challenges addressed in Carstens’ opening speech was the diversity of technological infrastructures that countries plan to develop for their CBDC projects. Carstens also mentioned the cyber risks and the creation of a new ground for criminal activities by malicious hackers.
Addressing the priorities in adapting CBDC projects to potential risks, the official highlighted the flexibility of smart contract design prepared during the infrastructure phase as the number one challenge. However, he also mentioned privacy concerns with the following statement:
“For instance, maintaining an appropriate level of privacy will be crucial for the public acceptance of CBDC projects.”
Carstens pledged support for central banks in their digitalization efforts. This support primarily comes from the BIS Innovation Hub and the Cyber Resilience Coordination Center. The former has recently played an active role by participating in numerous cryptocurrency projects.
In addition to assisting the Swiss National Bank in developing a CBDC project, BIS is also helping central monetary authorities of China, Hong Kong, Thailand, and the United Arab Emirates build a joint platform. Furthermore, discussions are underway for a series of agreements with the European Central Bank and other projects. Notably, partnerships with cryptocurrency giants like Ripple are facilitating payment solutions, particularly in developed countries.