The Bank of International Settlements (BIS) has released a new report that delves into central bank cryptocurrencies (CBCCs).

The report identifies two types of CBCCs – a widely available, consumer-facing payment instrument targeted at retail transactions; and a restricted-access, digital settlement token for wholesale payment applications. The report said:

“While CBCCs for retail payments remain at the conceptual stage, some central banks have completed proofs of concept for DLT-based applications. One of the reasons for the interest in DLT is that many central bank-operated wholesale payment systems are at the end of their technological life cycles. The systems are programmed in obsolete languages or use database designs that are no longer fit for purpose and are costly to maintain.”

The BIS said that eventually, all central banks may have to decide whether issuing retail or wholesale CBCCs makes sense in their own context.

“In making this decision, central banks will have to consider not only consumer preferences for privacy and possible efficiency gains – in terms of payments, clearing and settlement – but also the risks it may entail for the financial system and the wider economy, as well as any implications for monetary policy,” it added.

Furthermore, the report notes the various efforts by major central banks on exploring the concept of CBCCs including Project Jasper, Project Ubin, and others. It also highlights the potential of distributed ledger technology and states:

“One of the reasons for the interest in DLT is that many central bank-operated wholesale payment systems are at the end of their technological life cycles. The systems are programmed in obsolete languages or use database designs that are no longer fit for purpose and are costly to maintain.”

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest