{"id":162328,"date":"2022-08-18T05:38:20","date_gmt":"2022-08-18T05:38:20","guid":{"rendered":"https:\/\/precoinnews.com\/?p=162328"},"modified":"2022-08-18T05:38:20","modified_gmt":"2022-08-18T05:38:20","slug":"cbdcs-only-solution-to-smooth-continuation-of-the-monetary-system-ecb","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/crypto\/cbdcs-only-solution-to-smooth-continuation-of-the-monetary-system-ecb\/","title":{"rendered":"CBDCs only solution to &#x27;smooth continuation&#x27; of the monetary system: ECB"},"content":{"rendered":"<p>The European Central Bank (ECB) says the introduction of digital cash in the form of\u00a0central bank digital currencies (CBDCs) appears to be the &#8220;only solution&#8221; that will guarantee a &#8220;smooth continuation&#8221; of the current monetary system.\u00a0<\/p>\n<p>The comments were made as part of an ECB Working Paper Series, which was published in August, discussing monetary policy and financial stability as it relates to CBDCs \u2014 gathering insights from 150 academic papers on the subject.\u00a0<\/p>\n<p>The paper began with the observation that interest in \u201cthe economics of money and payments\u201d has increased dramatically in the past 15 years and expanded beyond a narrow academic circle. <\/p>\n<p>After an examination of that process, the paper introduces motives for the creation of a CBDC and the thorny privacy issues related to it. The authors observed:<\/p>\n<blockquote><p>\u201cWhile consumers tend to attribute high importance to privacy in surveys, they tend to give away their data for free, or in exchange for very small rewards in practice [\u2026]. Analyzing the roots for this apparent dichotomy, researchers point to various contributing factors.\u201d <\/p><\/blockquote>\n<p>Nonetheless, the paper concludes that the introduction of CBDCs is \u201cthe only solution to guarantee a smooth continuation of the current monetary system\u201d as physical money loses its economic \u201cfitness\u201d and cryptocurrencies and BigTech (large digital platforms) continue to make inroads into the financial system, noting:\u00a0<\/p>\n<blockquote><p>&#8220;There is no regulatory alternative that promises to eliminate the threat to the two\u2010layer monetary system. Since cash is only available in physical form, it is by construction not \u201cfit\u201d for the digital age.&#8221;<\/p><\/blockquote>\n<p>The importance of central banks achieving the right level of CBDC \u201ctake-up\u201d was stressed, and the authors also looked at potential regulatory action that could help CBDCs achieve their goals. <\/p>\n<p>The paper also dismisses concerns that CBDCs could cause shrinkage of the credit supply, noting claims that CBDCs could be a potentially disruptive force were unfounded. Privacy was identified as an area where more research is needed, as was end-user preferences for CBDC functions.<\/p>\n<p><strong><em>Related: Official explains why China CBDC should not be as anonymous as cash<\/em><\/strong><\/p>\n<p>This is the second paper devoted to crypto issues released by the ECB this month. Earlier, it compared the cross-border payment potential of CBDC, Bitcoin (BTC), and stablecoin, coming out in favor of CBDC.<\/p>\n<p>The paper is authored by Toni Ahnert a Research Economist within the ECB, Katrin Assenmacher, head of the Monetary Policy Strategy Division at ECB, and Financial Research Division economist Peter Hoffmann, among others.\u00a0<\/p>\n<p>Source: <a href=\"https:\/\/cointelegraph.com\/news\/cbdcs-only-solution-to-smooth-continuation-of-the-monetary-system-ecb\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The European Central Bank (ECB) says the<\/p>\n","protected":false},"author":3,"featured_media":162327,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>CBDCs only solution to &#x27;smooth continuation&#x27; 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