by Martina Fuchs
GENEVA, June 27 (Xinhua) -- The growing interest in central bank digital currencies (CBDCs), or the so-called digital banknotes, is fueled by the realization of the importance of data while the challenge lies in ensuring a high degree of security, data governance and privacy, a senior adviser with the Bank for International Settlements (BIS) has cautioned.
"I think this recent surge in interest (for CBDCs) has come from the realization of the importance of data in the digital economy," Hyun Song Shin, economic adviser and head of research at the BIS, told Xinhua in a recent interview, adding that 56 central banks around the world have so far announced plans to launch their own digital currencies.
"Because data really is the most important input and through the activities of users it's also the most tangible feature of the digital economy that is used for business activities," he said.
Established in 1930, the Switzerland-based BIS's mission is to support central banks' pursuit of monetary and financial stability through international cooperation, and to act as a bank for central banks.
Asked about the main risks for the further development of CBDCs, Shin underlined the need for better data governance as well as the importance of data privacy.
"The challenge is to try and incorporate features that will both ensure openness and the competitiveness of the payment system, as well as to ensure a high degree of security and data governance, and privacy," he said.
Shin also emphasized that central banks should design digital money with the public interest in mind.
"It's ultimately a matter of the underlying economics and technology," he said. "Once we can meet that challenge, it gives the promise of an open platform that has wide access and low costs, which can increase opportunities for the whole population, also across borders."
Shin highlighted China's digital currency, the digital yuan issued by the People's Bank of China (PBOC), the country's central bank.
China began piloting its digital currency in selected regions across the country at the end of 2019. Authorities in Beijing are expected to further expand the pilot program, paving the way for building a digital currency payment environment during the Beijing Winter Olympics in 2022.
"It has the potential to be a very important development," Shin said. "I think it's especially significant in the case of China because China is considering the e-CNY (digital renminbi) in the context of a mobile payments market, which is very heavily concentrated."
Meanwhile, Shin criticized Bitcoin and other cryptocurrencies, which are currently worth more than one trillion U.S. dollars globally but have attracted increasing criticism due to their high carbon footprint and other reasons.
"We have been very skeptical of cryptocurrencies," Shin said. "If you want to have an open, efficient and secure payments platform, then going down the cryptocurrency route is not the most promising one." Enditem
