German Central Bank President: Countries should quickly adopt CBDCs to remain competitive

Source: Blockchain Knight

Joachim Nagel, president of the Deutsche Bundesbank and member of the European Central Bank, stressed that central banks urgently need to reassess their business models and quickly adopt central bank digital currencies (CBDCs).

Speaking at a high-level panel at the Bank for International Settlements (BIS) Innovation Summit on May 6, Nagel expressed concern about the uncertain future facing central banks.

"There has been a major shift in people's views. If you asked me 20 years ago whether the business model of central banks would be destroyed, I would have said no. Now I am no longer so sure."

Nagel stressed that central banks must adapt to the changing situation and distributed ledger technology (DLT) is a key tool for this transformation.

Nagel also added: "We need to work on the business model. DLT is just a means, a tool that can help us get to this point."

Nagel also stressed that it is important to act quickly due to the waning appeal of physical currency.

"We need to speed this up. If part of your core product is losing its appeal, then you have to think about another new core product."

Francois Villeroy de Galhau, Governor of the Bank of France, agreed with Nagel's views and advocated the inclusion of digital currency in central bank operations.

Galhau also stressed that central bank money needs to evolve in accordance with the needs of the 21st century, advocating that CBDC remain stable within the financial system.

The European Central Bank is currently developing a digital version of the euro and plans to complete the project by October 2025. This move marks an important step towards embracing the potential of digital currency in modern finance.

Meanwhile, the Swiss National Bank (SNB) recently announced its pilot project "Project Helvetia III", which aims to explore the use of wholesale CBDC.Thomas J. Jordan, Chairman of the Management Board of the Swiss National Bank, said that central bank money plays an important role in ensuring financial stability, among other things.

However, Jordan warned against issuing retail CBDCs because this could undermine the stability of the financial system.

Jordan added that the potential risks of a retail CBDC outweigh the benefits. Instead, he advocated for a wholesale CBDC to facilitate the secure and efficient settlement of tokenized assets.