Joachim Nagel: Central Banks Need to Embrace Digital Currencies for Future Relevance

The
president
of
the
Bundesbank
and
a
member
of
the
European
Central
Bank
(ECB),
Joachim
Nagel,
emphasises
the
significance
of
central
banks
embracing
technological
innovation
and
implementing
central
bank
digital
currencies
(CBDCs)
in
order
to
maintain
their
relevance
in
the
future.
This
is
in
response
to
the
fact
that
the
financial
environment
is
undergoing
rapid
change.

Nagel
highlights
the
need
of
central
banks
modifying
their
business
models
and
reacting
to
the
altering
payment
environment
in
order
to
maintain
their
competitive
edge.
This
is
necessary
in
order
for
them
to
continue
to
survive.
Central
banks
are
needed
to
research
new
avenues
in
order
to
ensure
that
they
continue
to
be
relevant.
This
is
because
the
usage
of
physical
money
is
becoming
less
desirable.

Nagel
lays
a
significant
amount
of
stress
on
the
importance
of
central
banks
using
distributed
ledger
technology,
like
as
blockchain,
in
order
to
facilitate
the
adoption
of
CBDCs.
Using
this
technology,
central
banks
have
the
opportunity
to
increase
the
efficiency
of
financial
transactions,
as
well
as
the
security
and
transparency
of
such
transactions.

With
regard
to
the
doubt
around
Central
Banks,
Nagel
acknowledges
the
fact
that
there
is
a
great
deal
of
doubt
around
central
banks
as
a
consequence
of
the
advancements
in
technology
and
the
fluctuating
needs
of
customers.
He
lays
a
significant
amount
of
emphasis
on
the
need
for
central
banks
to “speed
up”
their
adaptation
to
these
changes,
which
in
turn
involves
the
adoption
of
CBDCs.

Potential
Benefits
of
CBDCs
CBDCs
provide
a
variety
of
potential
benefits,
which
may
be
enjoyed
by
proprietors
of
businesses
as
well
as
clients
of
such
businesses.
On
the
other
hand,
it
would
be
advantageous
for
customers
to
have
access
to
a
European
payment
mechanism
that
is
not
only
safe
but
also
simple,
speedy,
reliable,
and
applicable
throughout
the
whole
of
the
euro
area.
It
would
be
to
the
advantage
of
merchants
to
have
more
competition
in
the
payments
industry
as
well
as
speedy
settlement,
which
is
analogous
to
cash
transactions.

Image
source:
Shutterstock

.
.
.

Tags