Recently, the stance of the European Central Bank (ECB) regarding digital currencies is “if you can’t beat them, join them”.
They recognize the shortcomings of the existing system and consumer demand for better solutions. And, a central bank digital currency (CBDC) might be the answer to Europe’s problems but there are other solutions too. Especially, as China continues to develop its digital yuan in a move to gain global financial dominance, Europe is now recognizing the need to keep up.
Exploring new technologies, including CBDC
Speaking at the Joint Conference of the ECB and the National Bank of Belgium that held on November 26, Benoît Cœuré – ECB board member said that the bank will explore new technologies that could ensure safety for consumers. According to that, they will test the potential influences of digital currencies, including CBDC over the existing financial system.
Benoît Cœuré – ECB board member
Cœuré shared:
“A digital currency of this sort could take a variety of forms, the benefits, and costs of which the ECB and other central banks are currently investigating, being mindful of their broader consequences on financial intermediation”.
Particularly, Benoît Cœuré emphasized the reason that Europe needs to innovate with either a central bank digital currency or an alternative digital payments strategy because of a present lack of solutions for online payments, leading to a reliance on non-European solutions.
Therefore, the Eurosystem applauds the strategic initiative of a number of major European banks to create a true pan-European retail payment solution that has the potential to meet the vision of their strategy.
The ECB board member also noted that consumer demand rapidly rises for payment services that work across borders, as well as faster, cheaper and easier to use, special among younger people.
Furthermore, such initiatives would solve concerns of German and French officials that companies like Facebook are trying to usurp government control of the global monetary system.
“A CDBC could ensure that citizens remain able to use central bank money even if cash is eventually no longer used”.
On the other hand, he advocated for private companies to continue their own work in the space. He affirmed that potential central bank initiatives “should not discourage or crowd out private market-led solutions for fast and efficient retail payments in the euro area”.
Earlier this month, the Bank of International Settlements (BIS) chose Cœuré as the head of its Innovation Hub, starting on Jan. 1 2020. So, he will work on issues about central bank digital currencies, stable coins, and digital payment innovations as well as other regulatory issues.
ECBs generally, have been speaking out
Moreover, European central banks generally have been speaking out about cryptocurrencies recently.
Last week, Denis Beau, French central bank’s first deputy governor revealed that the eurozone would consider building a settlement system that bases on blockchain for the euro and potential a digital currency to solve payment issues between institutions in the area.
Additionally, senior officials from the bank also said in the past that they do not consider digital currencies such as BTC to be a threat and cryptocurrencies do not cause risks on financial risks on financial stability.
In this vein, Cœuré reported the bank is not “ignoring” the development of cryptocurrencies, but simply does not think it as a risk to the bank of the euro.
Currently, some other countries such as Venezuela already launched its own cryptocurrency, the Petro, and several national central banks, including those in Sweden, China, and Uruguay, are also planning on issuing digital currencies.
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