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CBDC could impair the transmission of monetary policy, says ECB

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CBDC could impair the transmission of monetary policy, says ECB 6

An Official of the European Central Bank noted that Central Bank Digital Currency (CBDCs) are now a necessity but we should be aware of its use.

Central Bank Digital Currency (CBDCs), a blockchain technology-based centralized digital currency Idea, is under consideration among 80% of the Central Banks of the world. More than dozen of Central Banks are in the pilot phase of CBDC or say the Digital version of their sovereign fiat currency. Among all Central Banks, the People’s Bank of China is leading in this race with its Digital Yuan, or say e-CNY. 

On 8 April, Fabio Panetta, the executive board member at European Central Bank, speaking at the Business School Banking Initiative Conference on Technology and Finance, shared an overview of the research on CBDC, digital Euro. 

Fabio said that development works and issuance of CBDC (Digital Euro) is a need in the present situation but we should not rely on this digital version of currency because it may cause some issues in the area of monetary policy of the Euro.

“(CBDCs) likely to become a necessity…..(..)…they should not become a source of financial disruption that could impair the transmission of monetary policy in the euro area.”

According to Fabio, Banks should be introduced with a special role in the process of Digital Euro to maintain the financial stability and keep the related risks away. This will further hold the Digital Euro use case for the users, where the Bank will play the fore and back end player, which will help to protect the use of digital Euro against Money Laundering.

A similar kind of research paper was recently published by the Federal Reserve of the US, which asserted the involvement of Banks to keep the privacy of CBDCs users. 

Fabio also noted that the use case of CBDC will surely reduce Cash and further foster competition among banks “by reducing banks’ market power and improving contractual terms for customers.”

Read also: 54 years popular show will feature “Bitcoin Beach” of El Salvador

CBDC could impair the transmission of monetary policy, says ECB

 

https://bitcoinik.com/cbdc-could-impair-the-transmission-of-monetary-policy-says-ecb/feed/

https://bitcoinik.com/cbdc-could-impair-the-transmission-of-monetary-policy-says-ecb/feed/

 

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