The Bank for International Settlements (BIS) has a central role to play in fostering responsible innovation within the central banking community. It works closely with central banks as they respond to the growing challenges presented by an increasingly digitised world. That is why the BIS is accompanying the Bank of Korea in its exploration of the future of central bank money.
Drawing on extensive research and experiments in the area of CBDC from different departments, the BIS is providing advice to the Bank of Korea and looks forward to learning from the implementation of this ambitious project.
Innovation and technology are central to the BIS’s efforts to support central banks’ pursuit of monetary and financial stability in the context of an increasingly digital financial environment. Indeed, the speed of innovation in the financial system poses a significant challenge for central banks. They need to integrate technological and financial considerations into the solutions they put forward. At the same time, they need flexibility in how they go about responding to the social demands they face.
Central banks are in the process of understanding these changes and developing the flexibility to adapt quickly and respond appropriately to them in the public interest. To this end, it is vital to experiment with new technologies through proofs of concept, prototypes and pilots to accumulate expertise.
The Bank of Korea’s pilot is an important example of how central banks are testing the boundaries of technology. In support of this initiative, the BIS is pleased to provide advice to the Bank of Korea on the design and implementation of the pilot. Such advice is being provided through a series of technical exchanges and seminars that seek to improve the design of the system, based on the lessons learned from other projects.
At the same time, the BIS recognises that the ultimate design and policy choices remain entirely the Bank of Korea’s discretion. This joint report represents the Bank of Korea’s own approach to CBDC after considering the BIS’s input.