Thursday, May 7, 2020

OMFIF Launches the Digital Monetary Institute

I received an email from the Official Monetary and Financial Institutions Forum (OMFIFalerting me to this news that relates to the ongoing question for central banks as to whether to move forward with central bank digital currencies. Below I have posted in the summary of the news announcement and the video discussing the news. This will provide those interested in this issue with somewhat of an update on current thinkng at central banks.


"OMFIF, the global central banking think tank, announces the launch of the Digital Monetary Institute. This creates a high-level group which convenes policy-makers, technologists, financiers and regulators to explore the challenges and opportunities of digital finance. The principal focus will be on payments instruments in wholesale and retail markets, with central bank digital currency being of particular interest. This builds on OMFIF research in the field, including a major survey on trust in monetary institutions which found that central banks were the most trusted institutions to issue digital currency."

"In the wake of private sector challenges to fiat currency, and as governments and central banks consider helicopter money to alleviate the economic crisis, the CBDC agenda is now close to the top of the policy-maker in-tray. Cash is losing its relative convenience. CBDC may transform the extra-territorial weight of leading currencies and become a significant factor in geopolitics. Discussions on how CBDC, blockchain and distributed ledger technologies will potentially change society and financial services have been central to OMFIF’s recent research and off-the-record meetings."


Here is a quote extracted from  the video above:

"We will undoubtedly see a central bank digital fiat retail currency at some point in the next three years. And it will most likely be from a smaller rather than large country."

My added comment: This update is completely in sync with what we have been reporting here for years. Significant change at central banks tends to move very gradually over time and it is reasonable to expect new ideas to be tested out first in smaller jurisdictions. 

We have been able to accurately project this scenario related to central bank digital currencies over time here on this blog due to some excellent input received from a variety to experts around the world, including one who works directly at the forefront of these kinds of issues all around the world.

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