Digital currencies have important role in future financial system, central bank chiefs say

Name: Is cryptocurrency too risky for China?
Uploaded: 2023-03-21T23:00:14.000Z
Duration: 6 min 54 s
Description: Is cryptocurrency too risky for China?

Central bank digital currencies (CBDCs) can serve as alternative to cash, anchor monetary policy in future, according to panellists at BIS summit

CBDCs also can help speed settlement of cross-border transactions in the future, panellists say

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European Central Bank (ECB) President Christine Lagarde answers questions during a committee hearing at the European Union Parliament in Brussels on Monday. Lagarde was one of several central banks heads who spoke at the Bank of International Settlements’ Innovation Summit in Switzerland on Tuesday. Photo: AFP

Chad Brayin London

Published: 7:00am, 22 Mar 2023

Central bank digital currencies (CBDCs) have an important role to play in future as both an alternative to cash for the general public and as a way to speed settlement of cross-border payments, according to a panel of central bank chiefs.

Speaking at the Bank of International Settlements’ Innovation Summit, Christine Lagarde, president of the European Central Bank (ECB), said central bank digital currencies can serve as an important anchor for monetary policy as use of physical banknotes declines, noting the use of digital payments has tripled in recent years and accelerated during the coronavirus pandemic.

“Everything is going digital. People clearly are expressing a preference for it and there is no reason why we, as a central bank, should not be exploring the reason why digital cash can be of good use,” Lagarde said during a pre-recorded panel discussion that was broadcast at Tuesday’s summit in Basel, Switzerland.

A digital euro could also act as a safeguard for European payment autonomy, Lagarde said.

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Is cryptocurrency too risky for China?

“When you look at your wallet and you look at your telephone and you see the applications that you use for payments or the cards you use for payment, you very soon realise those means of payment are not necessarily European,” Lagarde said. “We just have to be careful. As we have experienced recently with other instruments that are of critical use, such as energy, it is very unhealthy to rely on one single source of energy. It’s very unhealthy to rely on one single source of payment.”

Several central banks, including the ECB and the Bank of England, are conducting investigations into the potential issuance of digital currencies for the general public. The ECB is expected to conclude a two-year investigation period into creating a digital euro in October.