Deutsche Bundesbank discusses the digital euro

Adapt to stay happy – this is how Burkhard Balz quoted Confucius to justify the considerations for a possible digital central bank currency (CBDC). The board member of the Deutsche Bundesbank presented some questions that the European Central Bank, as the highest central bank in Europe, has to answer.

Central banker Balz raised many questions in his online speech on October 20 on CBDC (Central Bank Digital Currency). He first took the COVID-19 pandemic as an opportunity to talk about at least short-term changes to payment methods in Europe. In Germany, for example, 20 percent more people paid electronically in the first half of 2019 than in the first half of 2019. According to Balz, central banks also play an important role in this area of ​​the private sector.

Safe investments and high returns are not a contradiction in terms. Even with a small capital, Bitcoin Trader can help lay the foundation for a carefree and financially independent life. Everyone can take part in the free test, no previous knowledge is required.

The 51-year-old quickly started talking about digital central bank currencies. The European Union (EU) is currently far behind in developing such CBDCs. As a justification, Balz cites that important issues are to be clarified before taking action on the CBDC at European level. Advantages, risks, concrete reasons for the introduction of a digital euro and the way to the goal must first be explored. The central banks only served as service providers. The decision is ultimately made by politicians, says Balz.

CBDC between finance and politics

The Bundesbank board member also spoke of the planned Facebook stable coin Libra. The company Facebook promises to make payments faster and cheaper with the planned digital currency. By the time the project was presented in June 2019, Europe had long since started to deal with CBDC. The question of when a European digital currency is necessary is not easy to answer.

The main question to be asked is: under what conditions could the introduction of a CBDC or a digital euro become desirable for the public?

Burkhard Balz mentions this in his speech.

The overall trend is towards cashless payments. If the demand for cash falls, the importance of commercial banks and other payment service providers increases. Trust in private investors would be an imperative that not all citizens want to bow to. A digital alternative to cash is therefore only a solution from the Bundesbank or the European Central Bank, implies Balz. The ECB promises that a Euro-CBDC would only be complementary – at least as long as there is demand for cash.

Digital upheavals require adjustments to the financial system
Balz understands the task of the free market to be to develop innovations. The task of the Bundesbank is to protect the interests of society. In their case, it is financial and economic sovereignty, which then also affects political. He therefore sees the introduction of foreign digital currencies in particular as a danger. Stable coins, which could potentially take on global proportions, would therefore have to be extensively regulated. A separate CBDC is therefore one of many options, flexibility is important. An e-euro based on distributed ledger technology (DLT) is therefore also only one option. He doesn’t see it as a panacea for problems either.

In fact, the Bahamas launched their own CBDC on the same day. The sand dollar is now the first digital central bank currency to be used outside of a pilot project. It is true that the Central American island state with just under half a million inhabitants is difficult to compare with Europe. Nonetheless, the use of the currency could provide answers to problems.

Related Post