Joachim Nagel: Central banks must embrace digital currencies for future relevance.
Bundesbank President and European Central Bank (ECB) member Joachim Nagel emphasizes the importance of central banks embracing technological innovations and implementing central bank digital currencies (CBDCs) to remain relevant in the future. This reflects the fact that the financial environment is rapidly changing.
Nagel emphasizes that central banks must adapt their business models and respond to the changing payments environment to maintain a competitive advantage. This is necessary for them to continue to survive. Central banks must continue to explore new ways to remain relevant. This is because the use of real currency is gradually decreasing.
Nagel significantly emphasizes the importance of central banks using distributed ledger technologies such as blockchain to drive CBDC adoption. Using this technology, central banks have the opportunity to increase the efficiency of financial transactions, as well as the security and transparency of transactions.
Regarding doubts about central banks, Nagel acknowledges that there are many doubts about central banks due to technological advancements and the fluctuating needs of customers. He makes a significant point that central banks must “accelerate” their adaptation to these changes, which will eventually include the adoption of CBDCs.
Potential Benefits of CBDCs CBDCs offer a variety of potential benefits for business owners and their customers. On the other hand, it would be advantageous for customers to have access to a European payment mechanism that is not only secure but also simple, fast, reliable and applicable across the euro area. More competition in the payments industry and the ability to make payments as quickly as cash transactions will be beneficial to merchants.
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