But at the same time, it warned that cryptocurrencies might destabilize traditional lenders if offered widely to the general public.
The central bankers bank says that while a bank-developed digital currency might hold promise in the wholesale markets, the issue of coins to the public at large has implications for financial stability and monetary policy.
"General goal central bank digital currencies could revolutionise the way money is provided and the role of central banks in the financial system, but these are uncharted waters, with potential risks".
Bank of England Governor Mark Carney said that while a CBDC needed careful consideration, a more immediate priority is how to use the new technologies to meet the current demand for fully reliable, real-time payments.
The report was released ahead of the G20 summit in Buenos Aires on March 19-20, where cryptocurrencies will be one of the major themes addressed. The rise of distributed-ledger technologies and the peer-to-peer concept of private digital money challenges the raison d'être of central banks, which for centuries have dominated currency issuance and paid their bills by doing it.
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Had we continued at with the same pace, it would have taken us another 40 years to achieve the target. According to stats, due to TB every year 1.7 million lost their lives across the country.
More than 1,200 years after the first paper banknotes appeared in China, the use of physical cash is in demise in various countries as digital transactions surge.
Opinions about issuing CBDCs diverge greatly.
Likewise, digital currencies could serve as a "robust and convenient" alternative to cash, but already available, fast and efficient retail payment products-such as the European Central Bank's TIPS-probably limit its benefits.
"Central bank digital currencies could help make settling trades of securities and foreign exchange more efficient in the future".
While a CBDC might not alter the basic mechanics of monetary policy implementation, its transmission could be affected. However, it could challenge the two-tier banking system and exacerbate any financial crisis as depositors seek havens for their cash.
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The hands-off approach to CBDCs further broadens the divide between the European Union and other countries' central banks on the concept.
The appeal of a such a currency would be more pronounced if it were interest-bearing.
The reality is that cryptocurrencies aren't regulated and their fluctuations are more reminiscent of Dutch tulip auctions and dot-com booms than sensible financial policy.
The BIS also highlighted that, like banknotes, digital currencies can fall victim to illegalities-as a direct target or a means of transaction. The Fed's Powell said a year ago that "governance and risk management will be critical" for cryptocurrencies.
Central banks should think hard about potential risks and spillovers before issuing their own cryptocurrency, the Bank for International Settlements (BIS) said in a report on Monday.
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The report said virtual money issued by a country's central bank could, if widely used in cross-border transactions, lead to disruptive global capital flows and exchange rate fluctuations.