In a letter to the European Parliament on Wednesday, President Mario Draghi stated that the European Central Bank still has “no plans” to issue a central bank digital currency (CBDC). While continuing to closely study developments in the space, Draghi believes that the technologies that would potentially be used to create a CBDC, such as distributed ledgers, have not yet been thoroughly tested and require further development.
“The ECB and the Eurosystem currently have no plans to issue a central bank digital currency,” writes Draghi. “Nonetheless, we are carefully analyzing the potential consequences of issuing such a currency as a complement to cash… Our analyses considers the implications for the transmission of monetary policy, payment systems, financial stability and the economy more broadly.”
Draghi cites a number of potential benefits for introducing a CBDC, specifically that it could meet the demands for both the security and digitalization of the economy. He also mentions that it could allow monetary policy to reach a wider range of economic actors more directly.
ECB Doesn’t See a Concrete Need for a CBDC
Draghi asserts that the underlying technologies supporting digital currencies require more thorough testing and substantial development before they could be used in a central bank context. The ECB also believes that the need to issue individual accounts for households and companies to supports its digital currency would put it in an inappropriate competition for retail deposits with the banking sector.
The ECB letter concludes by stating that current conditions do not indicate a concrete need to issue a CBDC in the euro area.
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