Monday, 13 July 2020
Sovrano

Dutch central bank wants 'leading role' in digital currency development

De Nederlandsche Bank said today that it would like to experiment with a digital currency issued by itself and other European central banks.

In brief

- The Dutch central bank released a report that said it is “prepared to play a leading role” in the development of a CBDC.
- As the use of cash diminishes in the country, a CBDC could play an important role, the bank said.
- The central bank also said that a CBDC can also promote diversity in the payments market.

The central bank of the Netherlands, De Nederlandsche Bank (DNB), today published a report indicating that it is onboard with the idea of a central bank digital currency (CBDC).
The bank said a CBDC would be a big benefit to its citizens, and that it would like to play a leading role in its development.

The Dutch central bank said it has “a positive attitude towards CBDC,” and that it “could serve as a backup to payments made in private money, considering that we become exceedingly dependent on private money in a rapidly digitising payment system.”

It noted that during the coronavirus crisis, people are even less reliant on cash and a CBDC could remedy this. The bank also pointed to Facebook’s Libra project as a possible threat to monetary stability, despite Libra’s recent restructuring in a bid to appease global regulatory bodies.

The DNB added, however, that a digital currency could also bring risks. “In times of financial crisis, it could accelerate a bank run as citizens and firms try to avoid risks by converting balances they hold with commercial banks into CBDC,” the DNB said. “Accordingly, it is crucial that measures are taken to control the quantity of CBDC in circulation.”

The DNB went on to say that it would like to push ahead with the research and development of a CBDC and urged a “broad debate across the euro area.”

"We are prepared to play a leading role," the Dutch central bank said.

CBDCs differ from other digital currencies, such as Bitcoin, as they are issued and regulated by government institutions and are pegged to fiat-currencies, such as the US dollar or euro. Countries around the world are currently racing to find out whether a CBDC could be beneficial for their respective economies.

According to a recent study by the Bank of International Settlements, 80% of the world’s central banks are working on launching their own digital currency.

The Bank of England has been leading collective research into digital currencies, along with the Bank for International Settlements (BI) and five other of the world’s largest central banks––the Bank of Canada; the Bank of Japan; the European Central Bank; the Sveriges Riksbank; the Swiss National Bank.

While South Korea’s central bank is working to develop a state-backed digital currency—though there are no plans for an immediate release just yet.

China, meanwhile, has completed much of the development for its own digital currency. The country recently released its digital yuan in a beta test among government employees.


source: decrypt.co

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