A senior European Central Bank (ECB) executive, Francois Villeroy de Galhau has advocated for Central Bank Digital Currency (CBDC) development as a crucial stabilizing force for the financial system. According to a Bloomberg report, this endorsement highlights the growing recognition of digital currencies’ potential to enhance monetary policy and financial stability in the face of evolving economic landscapes.

Multi Use for Digital Currency and CBDC

According to Francois, the central bank should explore the usage of digital currencies for wholesale and retail purposes. He emphasized that the methods for providing central bank money should be updated to align with the 21st century. In his view, this will ensure that such funds remain a stability anchor for the financial industry.

Consumers have shown a particular interest in retail CBDC, which enables direct access to digital central bank money, similar to cash. However, various monetary authorities worldwide have been experimenting with wholesale CBDCs. This prioritizes the usage of efficient technology for payments between banks and the central bank, with the possibility of utilizing blockchain technology.

While discussions around CBDCs remain complex and multifaceted. Notably, the endorsement from ECB executives signals a growing acknowledgment of digital currencies’ potential to redefine financial systems.

It was in October 2023 that Christine Lagarde, President of ECB confirmed the steady advancement of the digital euro project. During that time, Lagarde highlighted the ECB Governing Council’s approval of the commencement of the preparation phase for the digital euro. It marked a pivotal step in establishing a CBDC in the Eurozone.

Crypto Framework for Eurozone

Recall that last year, Christian Lagarde affirmed that the coexistence of traditional cash and digital currency will offer consumers a choice that is expected to be convenient and cost-effective throughout the Eurozone.

Meanwhile, early this year, the ECB released a report on the progress of CBDC under the bank’s Rulebook Development Group (RDG). The ECB noted that implementing the digital euro framework involves a coordinated effort between various public and private entities. It underlines that intermediaries will serve as a bridge between the central bank and end-users in the digital euro environment.

These relationships create a network that forms the digital euro ecosystem, ensuring smooth and regulated transactions within this new digital currency framework.

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Filed under: News - @ January 1, 1970 12:00 am