The president of Germany’s monetary authority is advocating for a central bank digital currency (CBDC).
In a question-and-answer session with economists at the Official Monetary and Financial Institutions Forum (OMFIF) think tank, the president of the Deutsche Bundesbank, Joachim Nagel, says he supports a CBDC.
The OMFIF cites Nagel saying that “CBDCs will play a role in the future resilience” of Europe and will assist in protecting the sovereignty of the Eurozone. Nagel says CBDCs are a public good that central banks should offer.
According to the think tank, the Deutsche Bundesbank president views the rise of US companies in the global payments sector as a potential threat in the future since they could be “used in a digital environment as a form of weapon,” a prospect which makes it necessary for Europe to find a backstop measure.
The think tank further cites the Deutsche Bundesbank president saying that it’s “too early to tell” how CBDCs, as well as digitalization, could impact the neutral rate of interest – the interest rate that the European Central Bank aspires to ensure inflation remains stable and the economy stays at full employment.
The OMFIF also says Nagel is opposed to Bitcoin (BTC) becoming a form of a reserve currency. The central bank president sees Bitcoin as a “digital tulip” that is the “opposite of transparent.”
“This is not something central banks should look at. This is not a liquid form of something you want on the balance sheet. We should be very cautious here.”
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