CBDC Round-Up

Wholesale Digital Euro the Priority

Bruegel, a Brussels based European think tank, has published a paper considering the value added by CBDC in the context of the euro area ¹.

For Europe, financial inclusion is perhaps less important than responding to the increase in the digitalisation of finance. Equally, cryptocurrencies and stablecoins are only infrequently used for transactions, meaning that cash and the current commercial money systems have not been undermined. The need for a retail CBDC does not appear to have a strong case.

Wholesale CBDCs do offer the chance to revolutionise cross-border, cross-currency payments. Today these are slow, inefficient and expensive. If two central banks had operational CBDCs, they could settle transactions between themselves rather than the current cumbersome infrastructure and use of correspondent banks.