The European Central Bank is looking to identify consensus issues and research gaps related to CBDCs.
The European Central Bank (ECB) argues that its digital currency (CBDC) is the only solution that ensures the stability of the current monetary system.
This information is given in the ECB working series, published on May 8. This document is monetary policy and financial stability as it relates to CBDCs. This information was gathered from 150 academic papers.
The series also introduces the motives for establishing a CBDC and the conundrum of privacy issues associated with it. The document concludes that CBDCs are the only solution to ensure the stability of the current monetary system, as physical money loses its economic relevance, and cryptocurrencies and BigTech (major digital platforms) continue to penetrate the financial system.
The document also dismisses concerns that CBDCs could cause a decline in credit supply, noting that claims that CBDCs could be a potentially disruptive force are unfounded. Privacy was identified as an area in need of further research, as well as end-user preferences for CBDC functions.
This is the second document devoted to crypto issues released by the ECB this month. Earlier, it compared the cross-border payment potential of CBDCs, Bitcoin (BTC), and stablecoins, which benefit CBDCs.
The document was written by Toni Ahnert, an ECB Research Economist, Katrin Assenmacher, head of the Monetary Policy Strategy Division at the ECB, and Economist Peter Hoffmann of the Financial Research Division, among others.
