ETHERLive delivers real-time price and volume data across 16+ exchanges to users in a clear and easy-to-understand package. Users can get up-to-the-second updates for each exchange/currency pair, as well as aggregated market averages for each exchange, currency, and the market as a whole. It also provides a global converted average of all the currency pairs monitored by ETHNews, converted to USD.


24hr ---

The Basics

Learn the basics of Ethereum and various cryptocurrency technologies

Learn More

What is Ethereum?

Understand the underlying principles of the Ethereum Platform

Learn More

The Blockchain

Discover the revolutionizing technology known as the blockchain

Learn More

Press Release

Submit a press release for consideration on ETHNews

Submit Press

Story / Dapp

Submit a story or DAPP to be considered for publication on ETHNews.

Submit Story


Submit "Ethereum Explainer" content for consideration to be featured on ETHNews

Submit Topic
ETHNews Logo
Ether Price Analysis
Contact Us

BIS Publishes Notes On Central Bank-Issued Cryptocurrency




The so-called “bank for central banks” has released a paper highlighting some of the potential advantages and risks that central banks might face, should they move to issue their own cryptocurrencies.

The Bank for International Settlements (BIS) has released a paper defining what it calls “central bank cryptocurrencies (CBCCs).” The document explores some of this technology’s potential use cases and encourages central banks to familiarize themselves with it while stopping short of endorsing its adoption. 

Owned by 60 central banks, the BIS offers those banks, as well as other monetary authorities and international financial institutions, a range of financial services and acts as a “bank for central banks.” The feature, written by BIS Head of Secretariat Morten Linnemann Bech and University of California, Santa Barbara economics professor Rodney Garratt, divides CBCCs into two categories: a “consumer-facing” or “retail” token that would be available to all, and a “restricted-access, digital settlement token for wholesale payment applications” that would only serve “certain financial institutions.”

As an example of the former, the authors cite Fedcoin, a Federal Reserve-issued token that was first pitched in 2014 but which the Fed has yet to embrace, much less implement. Fedcoin’s value would be tethered to that of the US dollar and the Fed would “increase or decrease [its supply] depending on the desire of consumers to hold it” by converting between the supplies of Fedcoin and conventional dollars. They argue that such a currency would be significantly less susceptible to the price volatility that plagues most prominent cryptocurrencies today, but warn of risks that include more rapid bank runs, increased difficulty providing financial services to the unbanked, and disintermediation that could make it harder for banks to “perform essential economic functions, such as monitoring borrowers.” Furthermore, if consumers develop a significant enough preference for retail CBCCs, commercial banks could struggle to remain relevant in the financial landscape. And as the authors point out, the Fedcoin model raises another crucial question: whether it could “relieve the zero lower bound constraint on monetary policy ... If a retail CBCC were to completely replace cash, it would no longer be possible for depositors to avoid negative interest rates and still hold central bank money.”

The paper also describes how Sweden developed a “highly efficient retail payment system” which has seen such wide adoption that some Swedish retailers no longer accept cash and some Swedish banks no longer distribute it. However, as the Swedish banking system moves towards digital money, it remains to be seen whether it will adopt a solution based on cryptocurrency or a different mechanism by which individuals can hold digital money accounts with the country’s central bank.

Wholesale CBCCs may become a reality sooner than their retail counterparts, the authors suggest, because, “many central bank-operated wholesale payment systems are at the end of their technological life cycles.” One perk of building a backdoor into a CBCC blockchain: it would be significantly cheaper for a central bank to prevent double spending than leaving that function up to a “costly proof-of-work validation.”

The authors discussed two simulated wholesale CBCC pilot projects: the Bank of Canada’s Project Jasper and the Monetary Authority of Singapore’s Project Ubin, both of which rely on bank-issued tokens that correspond to the contents of “central bank reserves held in a segregated account.”  Additionally, Project Jasper boasts the enhanced efficiency of a liquidity-saving mechanism that “periodically seek[s] to offset payments against each other in a queue and settle only the net amounts.” For the time being, though, central banks including the Bank of Canada consider blockchain technology to be “not yet mature enough for current adoption.”

Finally, Bech and Garratt posit that blockchain technology could, “increase efficiency and reduce reconciliation costs in securities clearing and settlement.”

Adam Reese

Adam Reese is a Los Angeles-based writer interested in technology, domestic and international politics, social issues, infrastructure and the arts. Adam holds value in Ether, Bitcoin, and Monero.

ETHNews is committed to its Editorial Policy

Like what you read? Follow us on Twitter @ETHNews_ to receive the latest Bank for International Settlements, central bank cryptocurrency or other Ethereum business and finance news.