It Is All About Trust

Danmarks Nationalbank held a conference on 9 March in Copenhagen that looked at crypto assets and Distributed Ledger Technology (DLT), and then Central Bank Digital Currencies (CBDCs).

Setting the Scene

The Governor, Signe Krogstrup, set the scene. For currency to be trusted, it must hold its value over time. The central banks’ commitment to maintaining the value of money is more than just matching the demand and supply of money but, transparently, ensuring the whole monetary and financial system delivers stability.

A central bank has two levers to control value – the price of money and the quantity of money.

The declining use of cash is not in itself a threat to financial and monetary stability. The Governor does not see the much discussed value anchor role of cash – the ability of people to exchange their commercial bank money for banknotes – as a reality. People, particularly young people, just do not think that way.