Joachim Nagel, president of the Bundesbank and ECB member, emphasized the critical need for central banks to reassess their business models and swiftly adopt central bank digital currencies (CBDCs) during a panel session at the Bank for International Settlements’ Innovation Summit on May 6.
Nagel expressed concern over the uncertainty surrounding central banks’ business models, noting a shift from his previous confidence. He emphasized the imperative for central banks to adapt and integrate distributed ledger technology (DLT) as physical money diminishes in popularity.
Highlighting DLT as a potential tool, Nagel stressed the urgency of embracing emerging technologies to address the evolving landscape. As physical money loses appeal, central banks must expedite their efforts to redefine their core products.
Francois Villeroy de Galhau, a French ECB member, echoed Nagel’s sentiments, advocating for the adoption of digital currencies for wholesale and retail transactions. He emphasized the importance of central bank money as a stability anchor for the financial system, rather than its dominance in payment methods.
The ECB is actively developing a digital euro, having completed the investigation phase to determine its design and technical specifications. The project aims to modernize central bank money for the 21st century while maintaining stability in the financial system. The ECB anticipates completing the digital euro project by October 2025.
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