The European Apex Bank has registered a strong belief in Central Bank Digital Currency (CBDC). According to the financial institution, CBDC will aid the seamless continuation of the traditional monetary structure. The ECB made this revelation via its working paper series on monetary policies and financial stability regarding CBDCs.
The ECB underlined the emerging attention in the economics of money and payment in the last few years in the paper. The bank argued that the dynamism of money and payment had exceeded a purely academic audience. The report stated that regulators are contemplating the implementation of CBDC because people are embracing digital payments lately. Thus, pushing the use of cash as a means of payment into extinction.
The ECB opined that CBDC is the only means of ensuring the existence of the current financial system. The writers explored possible regulatory action to aid the CBDC in achieving its purpose. Also, they addressed how CBDC will still make Central Banks more relevant because of their responsibility in producing money and supplying credit.
The paper stressed that CBDC wouldn’t affect the supply of credit as predicted by many. The report established that the speculations are baseless. The report admitted that additional study is needed on privacy and end-user preferences for CBDC operations.
The ECB serves as the prominent financial institution for the 19 European nations that embraced Euro as their legal tender. The European Central Bank is working on initiating a virtual Europe to strengthen the European economy.
A European Central Bank executive board member at the National College of Ireland, Fabio Panetta, reflected on the development. According to him, public money must stick to its role as a monetary leader in the digital period. He added that a virtual Euro would strengthen the union’s monetary sovereignty and offer a type of central bank money used as a means of payment within the union’s territory.
Fabio added that the virtual Euro would strengthen the ECB’s presence to control the current competition in the virtual payment sector. He said the CBDC would help everyone use public money for virtual payment. Fabio added that CBDC by the ECB would be a logical and reliable way of payment established for the general public’s interest.
According to experts, CBDC would preserve the prosperous relationship between sovereign and private money. They believe it will build on this relationship to serve the general public better. At the moment, about nine countries have inaugurated their virtual currency.
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Source: https://insidebitcoins.com/news/cbdc-is-crucial-for-financial-stability