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At a virtual meeting held by the International Monetary Fund last month, Jerome Powell the chair of Federal Reserve said that 80% of central banks around the globe are looking into the idea of issuing a central bank digital currency (CBDC), however, the U.S. reserve hasn’t made a decision to follow suit at the moment.
Powell’s speech mirrors a research report released by the Bank for International Settlements (BIS) in January of this year which said that at present 80% of central banks globally are looking into developing a CBDC, up from 70% the previous year.
At the start of October, the ECB released a statement saying that it is thinking about using a digital euro to supplement the cash-based euro.
“A digital euro would preserve the benefits that the euro provides to all of us. It would help to deal with situations in which people no longer prefer cash,” the ECB said in a written statement on their website. “It would help cushion the impact of extreme events – such as natural disasters or pandemics – when traditional payment services may no longer function. It could also be crucial if people were to turn to foreign digital means of payment, which might undermine financial stability and monetary sovereignty in the euro area.”
Fabio Panetta from the Executive Board of the ECB said in a blog that central banks, including the ECB, should be ready to adopt a cashless system, which is the way that society is headed.
Panetta said “The report concludes that we should be ready to issue a digital euro if and when developments around us make it necessary. This means that we already need to be preparing for it. In the coming months, we will listen and experiment so that we are in a position to make a fully informed decision on the possible development and launch of a digital euro.”
The founder of JuniorMining.com David Erfle said that the ECB has little choice but to release a digital, or alternative currency due to the fact that there is still a huge amount of debt across the Eurozone that needs to be consolidated.
“I just know that the financial situation that they find themselves in as far as debt is concerned, leaves them no choice,” he said. “Now, they’re basically forced to, because they realize that there’s no possible way that governments of these major economies can continue to borrow at these ridiculously low levels of interest rates, but the greater problem is that all the past debt cannot be continuously rolled over because there are no buyers.”
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