BIS Says Traditional FIs Must Embrace Digitization

BIS cryptocurrency

To make sure that they stay at the center of the global payment system, the head of the Bank of International Settlements (BIS) says that central banks have to embrace the revolution in digital money, Bloomberg reported Thursday (Dec. 5).

BIS General Manager Agustin Carstens said in a speech, according to the outlet, “We have a responsibility to be at the cutting edge of the debate.” Carstens continued, “There is really no choice but to do so, as otherwise, events will overtake us.”

Even though the private sector “excels at customer-facing activity,” as Carstens’s argument goes, central banks ensure liquidity, provide the basis for trust, and make standards. Carstens is not enthusiastic about bitcoin and is concerned that large tech firms offering payment services means they could unfairly dominate due to the information resources that they already have.

Carstens started his BIS term advocating for authorities to rein in cryptocurrencies. However, he has overseen a hub’s implementation to facilitate FinTech collaboration. His caution, according to the outlet, is “clear.” He warns that individuals shouldn’t be distracted by flashy new developments at the cost of financial system stability. 

He gave the green light to wholesale central bank digital currencies (CBDCs) since they would be limited to institutions that have access to central bank deposits currently. But he reportedly nothing that it would be perilous to issue them to the public as a whole. 

In separate news, Carstens said that banks should not issue their own bitcoin-like tokens because it could undermine global financial stability as well as monetary policy. He has called Bitcoin “a bubble, a Ponzi scheme and an environmental disaster” in the past. 

He said if banks issued similar currency, it could lead to individuals moving money away from commercial banks. Such a move could potentially undermine the whole system, he said.

He had also pointed out there are other downsides to CBDC. It could possibly change how interest rates affect demand for money, and it could make for bigger central bank balance sheets.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.