ECB Study Says The Quicker Digital Currencies Are Done, The Better

ECB

ECB, the European Central Bank has conducted a study which revealed that central banks still dragging feets on issuing of adopting digital currency should do so as there advantages to it. The study also highlights that the earlier this is done, the better for the banks.

A country without a digital currency would lose some control over its monetary policy by being forced to react more strongly to spillovers from shocks in nations that do have such an instrument, researchers Massimo Minesso Ferrari, Arnaud Mehl, and Livio Stracca found.

They predict that such international spillovers would be ampified “to a significant extent” in open economies because the cash-like and asset-like qualities of digital currencies would be attractive to investors.

“Introducing a central bank digital currency sooner rather than later could give rise to a significant first-mover advantage to its issuer,” the authors wrote.

The study could have significant implications for central banks worldwide as they explore how and if to launch digital versions of their currencies.

The People’s Bank of China has already made significant headway in pilot tests with consumers.

ECB President Christine Lagarde said last week that while her institution is “not racing to be first,” her “hunch” is that it could create a digital currency within years.

She returned to the topic on Thursday, telling the European Parliament that the pandemic on the continent — parts of which have been slow to adopt digital payments — has accelerated a shift in public attitudes.

She returned to the topic on Thursday, telling the European Parliament that the pandemic on the continent — parts of which have been slow to adopt digital payments — has accelerated a shift in public attitudes.

This article is sourced from:https://www.bloomberg.com