Embracing central bank digital currencies is inevitable

The future of central banks depends on revising their business models and adopting central bank digital currencies (CBDCs), says Joachim Nagel, President of the Bundesbank and member of the European Central Bank (ECB)

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In a recent interview, Joachim Nagel president of the Bundesbank and a member of the European Central Bank (ECB), said that the future of central banks is dependent on their ability to adapt their business models and embrace the use of central bank digital currencies (CBDCs). During a panel session at the Bank for International Settlements (BIS) Innovation he expressed concern about the uncertain future of central banks and emphasized the need for them to redefine their business models in the face of a changing financial landscape.

He added that distributed ledger technology (DLT), such as blockchain, is seen as a tool that can help central banks navigate this changing landscape and find new solutions. He stated that central banks need to accelerate their efforts in this regard and consider developing a new core product to address the decreasing attractiveness of physical money.

Another advocate for digital currencies in central banking is Francois Villeroy de Galhau, an ECB member from France. During the same conference, Galhau suggested that central banks should explore the use of central bank digital currencies for both wholesale and retail transactions.

The European Central Bank (ECB) is already actively working on the development of a digital version of the euro. The investigation phase has been completed, and the ECB aims to finalize the project by October 2025, determining the design and technical details along the way. This initiative demonstrates the ECB’s commitment to exploring the potential of CBDCs and adapting to the changing financial landscape.