ECB announces new thrust to focus on CBDC, says it’s a ‘game-changer’

ECB announces new thrust to focus on CBDC, says it's a 'game-changer'

According to an executive at the European Central Bank (ECB), a retail central bank digital currency (CBDC) would be a “game-changer.”

Yves Mersch, an executive board member at the ECB, said that retail CBDC will now be the “main focus” of the institution.

This follows Mersch’s statement that a CBDC which is more financially-inclusive would be a “game-changer.”

The ECB preparing for adoption of CBDCs

According to Mersch, a wholesale CBDC that is only accessible to a select few among financial participants will not be any different than the status quo.

Mersch expressed his support for a retail CBDC as an alternative, saying, “A retail CBDC, accessible to all, would be a game-changer, so a retail CBDC is now our main focus.”

ECB announces new thrust to focus on CBDC, says it's a 'game-changer'

A survey was reportedly conducted among 66 central banks was commissioned by the Bank for International Settlements. What reflected is that 80% of those banks are already working on CBDCs.

He adds that while ECB is among those central banks, its primary goal is not to just follow the latest fashion trends. Instead, it is in preparation for the financial breakthrough that CBDCs could create in the future.

“We have to be ready. Ready to embrace financial technological innovation which has the potential to transform payments and money faster, and in more disruptive ways, than ever before.”

Nevertheless, the ECB executive board member believes that this would not disrupt the financial industry in a negative way. Accordingly, while digital currencies seem to be an alternative to cash, there is still no indication that people are going to discard the use of cash.

“Although cash often gets a bad press, demand is not receding. We currently see no indication that the public at large is willing to abandon the valued and trusted advantages of cash. But we are preparing to be ready should things change.”

Innovation as a part of the ECB’s mandate

Mersch noted that the introduction of CBDCs belongs to the thrust of the ECB to promote “financial technological innovation.”

Furthermore, based on the bank’s observation, the financial system is becoming more and more gravitated towards a cashless economy. Mersch highlights the importance of the central bank to remain in a position to provide risk-free money.

Therefore, the ECB seeks to keep up with the latest financial technological developments to assure its mandate.

Even if there isn’t any solid “business case” for CBDCs yet, this new focus on them can prepare ECB should there be a policy direction to issue CBDCs in the future.

Images courtesy of Thomas Hassel, Crypto360/Flickr

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