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Central banks may have to become more like big tech firms if they choose not to partner with the private sector when issuing central bank digital currencies (CBDCs).
According to new research published by the International Monetary Fund, central banks will have to emulate the innovations of Microsoft and Apple if CBDCs are to remain at the “frontier of technology.
Innovation in the digital age is orders of magnitude more complex and rapid than updating security features on paper notes,” authors Tobias Adrian and Tommaso Mancini-Griffoli writes. The authors note central banks will find it “challenging” to keep up with the pace of technological change, as well as competition from the private sector.
One solution, Adrian and Mancini-Griffoli suggest, is to increase co-operation with private sector firms by allowing them to innovate “on top” of core infrastructure. “By accessing an open set of commands, a thriving developer community could expand the usability of central bank digital currencies beyond offering plain e-wallet services,” the author write.
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