If it were up to BIS President Benoît Coeuré, CBDCs would be preferred today rather than tomorrow. The chief economist warns that if major central banks do not accelerate their digital currency projects, they will fall behind similar private sector initiatives.
A central bank digital currency is a digital currency issued by a central bank. According to ING Teunis Brosens, Chief Digital Economist, the discussion has been going on for some time (whether central banks should issue a digital currency), but it gained momentum when Facebook also announced its desire to issue a digital currency (DIM). Central banks were shocked because Facebook has 2.4 billion users. Banks may be sidelined if Diem proves successful.”
It is also now clear that China has been systematically building its own digital currency since 2014. Central banks in Europe, the UK and the US are lagging behind in the race. According to Brosens, for example, DNB finds the digital currency to be both interesting and positive, but it is still working to provide more clarity about the issues that still need to be resolved.
In July, the European Central Bank approved in a report the design and possible launch of a digital version of the euro. The Eurosystem mainly wants to use digital central bank currencies as a means of payment. According to Coeuré, the project will take at least another five years before a European CBDC can be commercialized and thus calls for an accelerated process.
Brosens also does not expect a European cryptocurrency to appear soon. “Despite the euro, central banks in Europe are not at all united about the arrival of a potential central bank digital currency. In Europe you have 19 member states that each want their opinion, and China is not bothered by that and that is why they are also forward. In Europe For example, the German central bank is on the brakes and France is fully focused on the wholesale side to maintain its influence in Africa.”