Tech

Bundesbank boss warns against the introduction of electronic central bank money

The digital money Libra, primarily promoted by Facebook, sparked the debate as to whether there should also be electronic central bank money in addition to cash. Bundesbank boss Jens Weidmann has now spoken out against the premature introduction of such an e-euro. "I don't believe in always calling for the state straight away. In a market economy, it is first up to the company to develop a suitable offer for customer requests," he said in an interview with the Handelsblatt to offer Europe-wide payment system.

Before introducing a central bank digital currency, you first have to better understand the advantages and disadvantages. "Depending on the configuration, customers might switch from bank balances to digital central bank money on a large scale and deprive banks of an important source of financing. The risk of bank run in a crisis situation could also increase," Weidman told the Handelsblatt,

The Bundesbank's experiments with blockchain technology, on the other hand, only served the payment transactions with the banks. So far, this has not been more efficient than central processing, but it does allow the installation of automatic functions through smart contracts. In any case, the cash will not be shaken: As long as "the citizens want it," it will be made available, Weidman affirmed.

Instead, Libra can be contained via regulation and competition law. Digital money must meet regulatory requirements for means of payment, as well as regulations for preventing money laundering and terrofinance. Most recently, Switzerland had already made it clear that Libra's current concept could not be approved.

Libra is said to become a cryptocurrency-based currency that is managed by a consortium of private companies and is covered by a basket of normal currencies such as the US dollar and euro. The bond to normal currencies is intended to avoid fluctuations in value such as Bitcoin and Co., which is why such a construction is also known as stablecoin.

This is met with sharp rejection by politicians and regulators. Instead, an e-euro is brought into play, issued by the European Central Bank. In Germany, Finance Minister Olaf Scholz had spoken out in favor of this. Projects for such digital currencies from central banks have already been launched by several countries: Among other things, Sweden is working on the E-Krona, and the People's Bank of China is also expected to be ready for digital central bank money.

Central bank money for end consumers has so far only been available in cash in Germany, but not in electronic form. When making payments via banking, such as transfers from checking accounts to checking accounts, only so-called checking money is moved. This is book money generated by commercial banks, which is simply a request for the cash to be paid out by the central bank. From a formal point of view, deposit money is not legal tender in Germany, so there is no obligation to accept it; in everyday monetary transactions, it still accounts for the majority of payments.


(Axk)



. (tagsToTranslate) Bundesbank (t) money (t) Jens Weidman (t) Libra (t) central bank