Bundesbank official: Launching a central bank digital currency is a 'political decision'
October 20, 2020, 10:53AM EDT
2 min read
During a speech on Tuesday, a member of the German central bank's executive board described the potential introduction of a Europe-centered digital currency as a "political decision" rather than a wholly technical one.
The remarks by Burkhard Balz come as the Eurosystem's central bankers inch closer to a possible launch of a so-called digital euro. Earlier this month, the European Central Bank published a report on the digital euro initiative, which stressed that stakeholders need to be prepared to move quickly should the decision to go forward be made.
Balz echoed that point, telling attendees of a Europe-Asia conference that "given the rapid pace of technical progress, we should be able to act quickly and reliably when it is deemed advisable in order to maintain confidence in the euro at all times."
But given the particulars of such a project — and the possible implications for financial stability, the health of the banking system and the very nature of how consumers pay for things and hold value — a digital euro creation would carry political implications, according to Balz.
"[I]ntroducing CBDC is a political decision rather than a technical decision. Therefore, a comprehensive conceptual analysis and assessment of CBDC relative to alternative options is necessary - especially in terms of the fulfillment of our mandate, but also regarding its impact on society as a whole," he said.
He also voiced support for international cooperation among central banks, including on the topic of so-called stablecoins.
"Second, the fact that many central banks are currently analysing this topic speaks in favour of international dialogue and close cooperation. That is also true in order to achieve quick and substantial progress in international payments," he said. "Third, I believe that it is in the interest of the global central bank community that new payment arrangements, like stable coins, with potentially global reach should only be offered if appropriately regulated and supervised."