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ECB: Central Banks Must Embrace CBDCs

06 May, 2024 Crypto people

ECB: Central Banks Must Embrace CBDCs

The future of central banks relies on revising their business models and quickly adopting central bank digital currencies (CBDCs), according to Joachim Nagel, president of the Bundesbank and member of the European Central Bank (ECB).

During a panel session at the Innovation Summit hosted by the Bank for International Settlements on May 6, Nagel expressed concerns about the uncertain future of central banks.

“If you would have asked me 20 years ago if the central bank business model [was] destroyable or not, I would have said no,” he reportedly stated in Basel, Switzerland.

Nagel continued: “Now I am not so sure anymore — and that is the reason why we are sitting here. We need to work on our business model. And DLT is just a means, an instrument that could help us here to get to that point.”

Nagel emphasized the importance of integrating distributed ledger technology (DLT) as physical money becomes less appealing.

“We need to speed up on all this [...]. If part of your core product is losing attractiveness, then you have to think about another new core product,” he stated.

French ECB member François Villeroy de Galhau also addressed the role of central banks and emerging technologies.

Earlier at the BIS conference, Galhau suggested that central banks consider using digital currencies for both wholesale and retail transactions:

“The way we make central bank money available has to be geared to the 21st century to ensure that central bank money maintains its fundamental role: this role is not to be the dominant means of payment, but a stability anchor for the financial system. This is why I believe that, sooner or later, we will need a central bank digital currency for wholesale as well as for retail purposes.”

The ECB is currently developing a digital euro and has completed its investigation phase to determine its design and technical details. The ECB aims to complete the project by October 2025.

Sources:

https://cointelegraph.com/news/central-banks-revise-business-model-embrace-cbdc-ecb-member

https://www.bloomberg.com/news/articles/2024-05-06/ecb-s-villeroy-says-cbdcs-needed-for-both-wholesale-and-retail

https://twitter.com/BIS_org/status/1787520726703980758

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