On Friday, a group of 7 major central banks, including the US Federal Reserve, set out to define what a digital currency would likely look like, to help catch up with a pioneering role for China and outpace private ventures like the stablecoin of Facebook's Libra.
Central banks and the Bank for International Settlements said the key features should include durability, availability, at low or no cost, appropriate standards, clear legislative framework, and an appropriate role for the private sector.
The growth in non-cash payments since the lockdown measures were imposed to combat the Corona pandemic, said John Cunliffe, deputy governor of the Bank of England and head of the Payments Committee at the Bank for International Settlements, that the growth in non-cash payments since the imposition of lockdown measures to combat the Corona pandemic, is accelerating how technology can change forms of money.
Central banks have begun closely examining digital currencies, after Facebook last year announced its Libra currency, which has yet to be launched, and will be backed by a mix of major currencies and government debt.
Since then, the entity behind Libra has modified its plans and is now hoping to launch several "stable currencies" backed by single currencies.
Cunliffe added that central banks need to keep pace to avoid the private sector closing payment gaps in inappropriate ways.
In addition to the Federal Reserve (the US Central Bank) and the Bank of England, the seven banks that have allied with the Bank for International Settlements include: the European Central Bank, the Swiss National Bank, and the Bank of Japan.
China is already testing a digital yuan, while the People's Bank of China says it will further spread the yuan in a currency world dominated by the dollar.
On Thursday, Kenji Okamura, the top Japanese diplomat concerned with financial affairs, said that China is seeking to gain the leading advantage in building its own digital currency, warning that "this is something we should fear."