Altcoin News: Board Member of the ECB Spoke About the Benefits of Central Bank Digital Currency

May 28, 2019, by Marko Vidrih on ALTCOIN MAGAZINE

A representative of the European Central Bank (ECB) spoke about the benefits of issuing central bank digital currency (CBDC) during his speech at the United Nations Monetary and Financial Conference.

In the framework of the Bretton Woods Conference, the President of the Bank of Lithuania and the member of the ECB Board Vitas Vasiliauskas raised the question of whether bank digital currencies should be used only for wholesale or retail, or is it appropriate to use them for both options.

In his opinion, bank digital currencies should serve as a means of exchange, payment and value preservation, reflecting the qualities of the current forms of money of the central bank, and not the usual reserve account or private cryptocurrency asset.

“In the event of the release of the retail CBDC, it would be available to the general public, while access to the wholesale one would be open to financial institutions only.,” said Vasiliauskas.

Among the potential benefits of issuing CBDC, he called an increase in the efficiency of payments and settlement of securities, as well as a decrease in credit risk and liquidity risks of the counterparty.

According to a representative of the ECB, interest-rate retail trade using CBDC can improve monetary policy and modernize its processes with respect to deposit and loan rates.

“The amount of cash in circulation is declining in some countries. This could mean that one day, even if it seems like a distant prospect — every single person will have to have an account with a private entity just to make payments. Unfortunately, this may lead to increased levels of financial exclusion,” warns Vasiliauskas.

According to him, for retail trade, government currencies will provide access to money of the Central Bank, and as a result, their release will have a positive impact on financial stability. The banker also stressed the importance of complying with the requirements for countering money laundering in case of issuance of state cryptocurrencies.

Recall that the ECB recently published a report on the potential impact of digital currencies on economic development and monetary policy, which deals with the consequences of replacing cash and deposits with cryptocurrencies. The study emphasizes that currently, cryptocurrency does not perform the function of money.

Earlier, Francois Villeroy de Galhau, a member of the ECB Board and Governor of the French Central Bank, expressed the opinion that stablecoins have more potential than Bitcoin.

Author: Marko Vidrih