BIS builds out "game-changing" blueprint for the future monetary and financial system
The Bank for International Settlements (BIS) is set to redefine the global financial landscape with its newly released blueprint for a futuristic monetary system. Harnessing programmable central bank money, this novel infrastructure aims to bridge the gap between tokenised commercial bank assets and real-time transactions.
The blueprint, highlighted in a special chapter of the BIS Annual Economic Report 2023, brings a whole new meaning to financial transactions and economic arrangements, potentially revolutionising the global monetary system. By integrating tokenised forms of central bank digital currency (CBDC) with commercial bank deposits and other tokenised assets, the new design opens up an era of boundless possibilities for both economic and monetary system evolution.
"We are at the cusp of another major leap in the monetary and financial system, which will have far-reaching consequences for the economy and society at large," says Hyun Song Shin, Economic Adviser and Head of Research of the BIS. According to Shin, this innovation is a game-changer, pushing the boundaries of traditional transactions.
This proposed infrastructure will deliver more than speed and cost efficiency. It will foster a wave of innovation enabling transactions that were previously inconceivable, limited only by the ingenuity of public and private sector innovators.
The envisioned improvements include streamlined securities settlements, tokenised deposits with in-built regulatory checks, and smart contract-enabled credit aimed at reducing trade finance costs for smaller firms. Furthermore, using privacy-protecting technology to share data on potential borrowers could broaden credit access to underprivileged segments of the society.
In collaboration with other public authorities and the private sector, central banks worldwide are eager to explore the possibilities offered by this new monetary system, seeking to enhance cross-border integration. The BIS continues to lend its support to these endeavors, fulfilling its role as a hub for international cooperation and innovation among central banks.
Further details of the blueprint will be available in the full BIS Annual Economic Report and the BIS Annual Report scheduled for release on 25 June.