The Bank of International Settlements is owned by 63 central banks and serves as bank for central banks. One June 23, 2021, the BIS released one chapter of its full annual report, which will be released on June 29. From the title of the chapter, “CBDCs: An Opportunity for the Monetary System,” it is apparent that the BIS is very much in favor of CBDCs (central bank digital currencies) — not very surprising considering the makeup of the BIS. But along the way, the BIS also made clear its negative views of cryptocurrencies. It wrote:

By now, it is clear that cryptocurrencies are speculative assets rather than money, and in many cases are used to facilitate money laundering, ransomware attacks and other financial crimes. Bitcoin in particular has few redeeming public interest attributes when also considering its wasteful energy footprint.

This last point referred to the oft-cited metric that the estimated annualized electricity consumption of the Bitcoin network is roughly the same as that of the Netherlands. As to stablecoins, the BIS was not as negative, but only slightly so. The chapter explained that they are an attempt to import credibility by being backed by real currencies, but then noted that stablecoins are nevertheless only as good as the governance behind the promise of the backing. In the view of the BIS, “cryptocurrencies, stablecoins and the walled garden ecosystems of big techs all tend to work against the public good element that underpins the payment system.”

The chapter includes analyses on:

  • The architecture of CBDCs and how they would fit into the financial ecosystem;
  • The international dimension of CBDC issuance and the implications for cross-border payments;
  • Project Helvetia, which demonstrated the feasibility of integrating tokenised assets and central bank money;
  • Application programming interfaces and how they could act as a bridge between different providers and simplify transactions.

In touting the benefits of CBDCs, the BIS also lays out the design choices for CBDCs, which, alongside cash, would be issued and backed by a central bank. BIS analysis finds that CBDCs would best function as part of a two-tier system where the central bank and the private sector work together to do what each does well, with the central bank operating the core of the system to ensure its safety and efficiency. The BIS says the most promising CBDC design would be one tied to a digital identity, requiring users to identify themselves to access funds. The BIS’s head of research, Hyun Song Shin, is quoted as saying that CBDCs “preserve the core features of money that only the central bank can provide, anchored in the foundation of trust in the central bank.”

Of course, the BIS statements in the previous paragraph that place the central bank at the center of the virtual currency universe encapsulate the very “us vs them” mentality that is at the core of so many Bitcoin true believers. They specifically sought out a currency that is beyond the control of any government or central bank. And, the pseudonymous nature of the blockchain transactions is yet another reason why many in the crypto crowd will disagree with the views of the central banks. In the 24 hours after the release of the BIS chapter, Bitcoin was up by a double-digit percentage.


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. David has been included in Chambers for his expertise in international arbitration. He is the editor of the firm's blockchain blog.