• Wed, 20 Nov 2019, 06:07 AM
  • All times are UTC
  • Edition:
Copy link
Increase text size
Decrease text size
Link copied

ECB's Vitas Vasiliauskas talks about the pros and cons of central bank digital currencies

“Vitas Vasiliauskas and Zoja Razmusa” by EU2017EE Estonian Presidency is licensed under CC BY 2.0

Tue, 28 May 2019, 09:44 am UTC

An official of the European Central Bank (ECB) stressed the benefits of central bank digital currencies (CBDCs) while warning to take caution in a speech published by the Bank of International Settlements (BIS) on Monday.

Vitas Vasiliauskas, the chairman of the Board of the Bank of Lithuania, said that CBDC should be different from traditional reserve account and private crypto assets. Furthermore, it should possess the qualities of the existing central bank money allowing it to be used as a medium of exchange, a means of payment, and a store of value.

In terms of accessibility, he discussed surrounding issues whether CBDC should be retail or wholesale only currencies, or both. But in the event of retail CBDC, it should be made available for the general public, whereas wholesale currencies are limited to financial institutions.

Vasiliauskas also pointed out several advantages of wholesale CBDC, including enhanced payment and securities settlement efficiency and decrease counterparty credit and liquidity risks. Retail CBDCs, on the other hand, can help ensure continued access to the central bank money for people.

In addition, interest-bearing retail CBDC could improve monetary policy transmission by enhancing pass-through of the policy to deposit and lending rates and increase the effective lower bound constraint.

The amount of cash in circulation is declining in some countries. This could mean that one day, even if it seems like a distant prospect — every single person will have to have an account with a private entity just to make payments. Unfortunately, this may lead to increased levels of financial exclusion,” he said.

Vasiliauskas admitted that while the technology for retail CBDC is available, it has not been done yet. “In the extreme scenario, CBDCs could encourage ‘digital sector-wide bank runs which could occur in unprecedented speed and scale,” he said.

He further pointed out that CBDC would crowd out cash and commercial bank deposits, increase credit risks, and distort financial markets with large-scale asset accumulations. He also enumerated other drawbacks including the uncertain robustness of the underlying technologies to issue CBDC and the adherence to money laundering requirements.

Vasiliauskas spoke at the Reinventing Bretton Woods Committee conference “Managing the Soft Landing of the Global Economy” in Washington DC, on April 12.

The speech was published amid reports that some lawmakers want to oust Vasiliauskas, saying he is not cooperating adequately with a probe into the 2008 financial crisis, Bloomberg reported.

<Copyright © TokenPost. All Rights Reserved. >

To leave a comment, please sign in.
  • Bitcoin (BTC) $8,197.12 (-0.65%)
  • Ethereum (ETH) $177.78 (-0.61%)
  • XRP (XRP) $0.254900 (+0.86%)
  • Bitcoin Cash (BCH) $243.46 (-1.63%)
  • Litecoin (LTC) $55.98 (-1.19%)
  • Bitcoin (BTC) $8,197.12 (-0.65%)
Nov 20, 2019 (Wednesday)
CA$16M client funds of Einstein Exchange reduced to CA$45,000 in ‘hard assets,’ interim receiver reported
Galaxy Digital launches two bitcoin funds with Bakkt and Fidelity Digital Assets as custodians
Crypto Technicals: BTC/USD holds above 55W EMA (7952), 'Hammer' formation raises scope for minor recovery
Fidelity Digital Assets gets approval to offer crypto custodial services in Empire state
Crypto risk assessment platform secures $4.9M funding with PayPal leading the charge
Nov 19, 2019 (Tuesday)
Crypto exchange Gemini acquires NFT platform Nifty Gateway
Weibo suspends accounts of Binance and Tron amid fresh crackdown of crypto businesses in China
Crypto Technicals: Major Cryptocurrency Support Resistance Levels
Crypto Technicals: Major Cryptocurrency Daily Technical Outlook
Crypto Technicals: XLM/USD breaks below 50-DMA, hits 3-weeks low (0.0645), bias bearish
Binance unveils fiat-to-crypto gateway for Turkey
U.S. SEC to review Bitwise’s Bitcoin ETF proposal; Reason behind the revisit still unclear
Factom wins second DHS SVIP award to develop blockchain-based anti-forgery solution
Blockchain-based payment processor RadPay secures $1.2M in a series seed round
National Advisory Council urges FEMA to adopt blockchain tech to increase aid efficiency for disaster-stricken areas
Crypto Technicals: BCH/USD breaks 4H 200-SMA support, hits 4-week lows at 237.50, bias lower
Nomura’s joint venture ‘Boostry’ releases official webpage of its security token platform
Fledgling crypto money lending platform raises $25M led by Andreessen Horowitz
Crypto Technicals: ETH/USD ends consolidation, break below 50-DMA and rising volatility support downside
Indian state of Telangana to adopt blockchain tech to fight fraudulent academic certificates
Subscribe to the TokenPost newsletter!
Don't show me this again today.
Back to top
Copyright ⓒ TokenPost. All Rights Reserved.