Central Banks Urged to Adapt Digital Currencies and Reform Business Models, Bundesbank President States
Summary:
Joachim Nagel, President of Bundesbank and member of the European Central Bank (ECB), stresses the need for central banks to reshape their business models and rapidly adapt central bank digital currencies (CBDCs), in response to growing uncertainties. During the recent Innovation Summit, he and French ECB member, Francois Villeroy de Galhau, both emphasized the importance of integrating distributed ledger technology (DLT) as physical cash loses its appeal. The ECB is on track to develop a digital euro, aiming for completion by October 2025.
The President of the Bundesbank and member of the European Central Bank (ECB), Joachim Nagel, has emphasized the need for central banks to expedite their adaptation of central bank digital currencies (CBDCs) and alter their business models to secure their future. Nagel shared these concerns during an Innovation Summit panel discussion facilitated by the Bank for International Settlements on May 6, highlighting the ever-increasing uncertainties brewing within central banks. "Two decades back, I would have confidently asserted the undestroyable nature of the central bank's business model. However, now, I stand doubtful," he revealed during the summit held in Basel, Switzerland. He pointed out the crucial need for the banks to evolve their business strategies and stated that distributed ledger technology (DLT) could significantly aid with this.
The Bundesbank leader underscored how imperative distributed ledger technology's integration is, as physical money gradually loses favor. He projected the need for quick action saying, "If your principal product is shedding appeal, you need to contemplate a fresh prime product." BIS was the source of this information.
Similarly, Francois Villeroy de Galhau, a French ECB member, highlighted central banks' interaction with rising technologies during the BIS conference. He hinted at the possibilities of using digital currencies for both wholesale and retail transactions. Galhau anchored his view on the necessity for central banks to adapt to contemporary realities, ensuring that central bank money retains its fundamental role - not as a prevalent mode of payment but as a financial system's stability anchor. His conviction is that the necessity for a central bank digital currency would inevitably arise for wholesale and retail purposes.
As of now, the ECB is on its path to creating a digital euro, having concluded its exploratory phase for ascertaining its design and technical details. The bank hopes to wrap up the project by October 2025.
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Published At
5/7/2024 12:10:00 AM
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