Central Bank Crypto Still 10 Years Away, Says Former ECB Vice President
Former Banque de France governor, Christian Noyer, suggested that a consumer-focused central bank digital currency (CBDC) could still be 10 years away, despite current interest from over 50 central banks. However, he did predict that digital payments between commercial banks will happen fairly soon, according to an article on FT.com.
Interest, But ‘Clear Hesitation’
Noyer stated that the decline in cash usage, along with the rise of private cryptocurrencies such as Facebook’s Libra, had spurred a large number of central banks to investigate the possibilities of a CBDC.
Sweden and Uruguay have even launched pilot-projects for consumer-based digital currencies. Sweden in particular fears that its entire payments market may be reliant on the private sector without one.
However, Noyer added that there was ‘clear hesitation’ from top financial institutions, due to fears over privacy and impact on monetary policy control.
Whether they will enact the projects in the next 10 years remains to be seen. I don’t think we are close to the departure lounge, but the fact that they want to study it means a lot of work will continue this year.
Links Between Commercial And Central Banks Decisive
One issue that may arise with a CBDC is that consumers may be expected to hold an account with the central bank, rather than using a commercial bank as an intermediary. Such a move would make the financial institution responsible for customer checks and anti money laundering (AML) measures.
It would also disrupt the commercial banks position in the financial system. Consumers currently only access central bank money through notes and coins.
Noyer feels that central banks will likely look to what commercial banks are doing for themselves rather than upsetting the apple cart. This will however, lead to a potential digital currency for wholesale payments between central and commercial bank, he believes.
There needs to be a central bank-backed currency somewhere. It’s an important part of the credibility of money that the general public can access.
From Banker To Blockchain Board Member
Noyer was governor of the Banque de France for 12 years, and before that, vice-president of the European Central Bank (ECB) when it was founded in 1998.
He is now a board member of the Setl group, which develops blockchain-based electronic ledgers to process payments on a bank’s balance sheet.
Do you think it will take 10 years before we see CBDC’s? Add your thoughts below!
Images via Ed.nl