ECB: Central Bank Digital Currencies Could Be Used To Improve Payment Systems
A digital currency could be used by the European Central Bank (ECB) in order to improve payments around the world. According to a document released by the ECB, adoption of this digital asset could be accelerated due to the lower cash usage in several countries.
ECB Analyses Effects Of Digital Assets
As reported by Reuters, the ECB is analyzing the effects of creating a digital currency that would make international payments cheaper. This would only be implemented or planned only within Europe and if payments across the continent remained too expensive.
Considering that the digital currency could have large implications for financial, monetary and economic stability, the implementation of this currency should be carefully studied and assessed.
This document is expected to be presented to Finance Ministers of the European Union on Thursday.
At the same time, Christine Lagarde, the president of the ECB, explained at her first hearing before the European Parliament that central banks may adopt a digital currency.
Mrs. Lagarde has always been very positive about digital assets and central bank digital currencies (CBDCs). When she was the president of the International Monetary Fund (IMF) she has supported different researches on the matter and showed they were open to discussing positive and negative aspects of CBDCs if implemented.
According to Lagarde, users will be able to use central bank money for daily transactions. Nevertheless, there are some risks that must be assessed in terms of monetary policy and how it could affect the real economy. This is in line with what the aforementioned document explains.
The European Central Bank has established negative interest rates in the economy in order to promote economic growth through spending rather than through investment and savings. Some banks are already passing these negative interest rates to clients.
The ECB is also a key player in Europe’s economy considering that it has been working as a lender of last resort to banks in all the continents.
There are several countries that have already analyzed the possibility to implement CBDCs in the economy. Some of these countries include the UK, Ukraine, Canada and Uruguay, among others.