Central bank governors agree COVID-19 has accelerated regulators’ interest in CBDCs

COVID-19 pandemic has, among other things, severely affected global markets and with regard to the pandemic’s consequences, several representatives convened at an online meeting of Central Bank Governors’ Club, hosted this week by Elvira Nabiullina, the Governor of the Bank of Russia. At the meeting, representatives from central banks across the globe discussed the pandemic’s effects.

They believed that COVID-19’s effects were one of the reasons why financial regulators are now “more and more” interested in central bank digital currencies (CBDCs). The representatives discussed the topic about regulators’ growing interest in CBDCs during a follow-up meeting of the Central Bank Governors’ Club, hosted by Bank of Russia Deputy Governor Alexey Zabotkin. 

From the perspective of the representatives, a central bank “should” prioritize the assessment of the impact CBDCs will have on monetary policy and financial stability, and then go on to develop a procedure “to avoid and mitigate cyber risks.” In addition to this, the representatives noted that the pandemic affected expansion of e-commerce as well as digital settlements technologies.

The meeting consisted of representatives from 26 central banks across the Black Sea region, the Balkan countries and beyond.  Other than the central bank heads, the meeting also had representatives from the International Monetary Fund and the World Economic Forum, as well as from the Bank of International Settlements.

In the months following COVID-19, several central banks have all announced updates with regard to their CBDC projects. In February, some banks had held a discussion about digital currencies on the sidelines of an IMF conference. Whilst, early last month, central banks from certain nations had issued a report with the Bank for International Settlements, which highlighted potential collaborations on their respective CBDCs.

So far, China has been the most active in pursuing its CBDC project, the digital yuan. In fact, the Governor of the central bank of China, Yi Gang, had recently declared that in its pilot program, the digital yuan has been used in over four million transactions totaling more than 2 billion yuan (about $299 million) to date.