European Central Bank (ECB) Executive On Central Bank Digital Currencies (CBDCs): They Have Uses

European Central Bank Official Affirms That CBDCs Have Several Uses

An official from the European Central Bank called Vitas Vasiliauskas has recently talked about Central Bank Digital Currencies (CBDCs). He is known as a member of the governing council of the bank and also a board member of the Bank of Lithuania.

According to him, there is an on-going debate on whether CBDCs should actually be retail, wholesome or both happening. Any version would basically act primarily as a medium of exchange, though, substituting money (or coexisting with it).

He affirmed that a retail version would be just like fiat currency while the wholesale one could be restricted to financial companies and accredited investors, for instance. He also talked about mixed projects which could be done.

Vasiliauskas said that many kinds of submodels could exist and that a wholesale version could be used in improving how payments are done, as well as to reduce risks related to liquidity and counterparty credit as well.

This version of the CBDC could easily replace all the cash reserves of the bank with the token, which would be a bearer asset that would be transferred without intermediaries to the receiver. This would be completely different from how the central banks are actually working at the moment and could represent an important advancement for them in this case.

The retail option, according to him, could be either value-based or account-based and there is the possibility that it would be a lot like fiat currency in digital form, only more guaranteed by the central banks of each country.

Another idea was to use this retail token in order to offer everybody banking options. They could just open up accounts on the central bank in case they were not able to do it at private banks before, or they could have accounts in both banks.

Despite talking about all these possible benefits, Vasiliauskas is not completely enthusiastic about the new options. He affirmed that the cost-benefit of doing a project such as this one might be very good.

He also talked about how the wholesale version might be the most indicated option at the moment. While the Bank of Lithuania sees some potential in the idea, it seemed like a “distant prospect” to him, mostly because there is a more urgent need of understanding theoretically how this new monetary currency would work before actually doing it.

Because of this, he talked about how some central banks could start doing some pilot experiments soon.

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Gabriel Machadohttps://bitcoinexchangeguide.com/
Brazilian journalist who is interested in the future of the financial world. Has a special interest in the blockchain technology and the global financial markets. Covers economic and technology news with a focus on the fintech industry and has been writing about the cryptocurrency market since the start of 2017.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

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