The COVID-19 pandemic presented to shed light upon the existing problems in the global financial system, as well as an accelerator of destabilizing factors such as the growth of sovereign debt and consumer debt in developing markets.
At the online meeting of the Club of Central Banks Governors’, organized this week by the head of the Bank of Russia, Elvira Nabiullina, the representatives were unanimous regarding the aftermath of the current crisis.
The meeting and the topics
The meeting included 26 representatives of central banks from Central Asia, the Black Sea region, Balkans, and other countries. Not only the heads of the central banks of the CIS countries (the former Soviet republics) were present at the meeting. But also, Israel and China, and the representatives of the International Monetary Fund and the World Economic Forum, the Bank for International Settlements and other central banks and major financial institutions.
They noted the activation of electronic commerce, as well as the development of the technologies for digital payments. These trends are prompting financial regulators more seriously than ever before, to look into the digital currencies of central banks. The overwhelming majority of central banks around the world, in one way or another, have already engaged in research of the CBDC. This growing interest is reflected in the constant flow of official statements on this question.
Financial regulators in interaction
At the consequent discussions of the Central Bank Management Club, organized by the deputy chairman of the Bank of Russia, Aleksey Zabotkin, Central Bank representatives discussed the increased activity of financial regulators on CBDC. After a brief presentation of the Bank of Russia, the participants agreed that it was necessary to assess the potential effects of the CBDC on the financial stability of the countries. Also, they concluded that there is a necessity to develop procedures for reducing cyber risks.
Participants further discussed the problems that CBDCs provide for international cooperation, standards, monetary policy, and technical compatibility. The headway progress of China in the development of CBDC has increased the geopolitical tension at large, including the USA, which was also mentioned.
