Cecilia Skingsley, first deputy governor of Sweden’s central bank has warned that a central bank-issued digital currency will not solve all existing problems. She says that not all countries will “play nice” with each other. Interoperability cannot be established or the desired way of CBDC’s interacting.
At the European Central Bank’s (ECB) annual forum on central banking in Portugal, Skingsley was on the panel with ECB Executive Board member Fabio Panetta, Ulrich Bindseil, ECB director general of Market Infrastructure and Payments, Neha Narula, a director of the Digital Currency Initiative at the MIT Media Lab, and Princeton economist Markus Brunnermeier.
The acting deputy governor of Sweden’s national bank was appointed for the position in 2019. She also became the head of the innovation arm at the Bank for International Settlements (BIS). BIS will release a report on CBDC interoperability in the coming weeks. Several CBDC experiments with central banks around the world have been conducted by the BIS Innovation Hub.
“We have to think about different levels of interoperability… It’s going to be jolly hard for everybody who wants to be part of that to agree on governance and supervision and the like.”
Even Visa announced that it was working on a platform that would enable interoperability between CBDCs and other private stablecoins. Majorly coins pegged to a traditional currency like the Euro.
BIS asked central banks to start working on CBBCs to find themselves fit for the digital future. Back in September 2021, when BIS had recommended this, China had already made some progress on a digital RMB, its sovereign currency.
There are high hopes for CBDCs, for possibly smoothing out cross-border payments to broadening financial inclusion. As indicated by the panelists, CBDCs will acquaint competition with a digital payments world progressively overwhelmed by private banks.
Yet, serious trial and error into CBDCs has just barely started and there are a large group of suggestions and plan components to consider. One thing that could complicate interoperability between various countries’ CBDCs is the degree of access governments will actually want to provide to their CBDC.