coindesk.com
Central banks lack the expertise and skills needed to mitigate central bank digital currency (CBDC) risk and must prepare to implement stronger measures, a consultative group set up by the Bank for International Settlements said in a Wednesday report.
Countries around the world have been exploring issuing CBDCs to improve payment efficiency and financial inclusion. But the introduction of CBDCs could have "major implications" for the business model of central banks and could create a variety of risks, the report said.
"A key risk are the potential gaps in central banks’ internal capabilities and skills," the report by the BIS Consultative Group on Risk Management said. The central banks of Brazil, Canada, Chile, Colombia, Mexico, Peru and the United States are represented in the group.
It urged central banks to set up processes to identify, assess, monitor and report CBDC risks. The report said implementing cutting-edge tech like distributed ledger technology, which powers crypto, will not only require a high degree of expertise but also have central banks address technical issues they may not be currently equipped to do.
"For CBDCs to be a reliable means of payments, central banks also need to address, among others, the risks of interruptions or disruptions and ensure integrity and confidentiality," the report said.
The BIS group recommended that central banks conduct careful and realistic assessments of risks. It proposed an integrated risk-management framework that can be applied from the research and design stages to the operation of a CBDC.