Central Banks all over the world are pooling in resources to launch their respective Central Bank Digital Currencies as a response to the growing crypto popularity. China is close to launching its digital Yuan, while the prospect of a digital dollar gets brighter every day. Amid all this, the Dutch Central Bank is emerging as the one to lead the way in the quest for a digital Euro.
The Dutch central bank, also known as De Nederlandsche Bank (DNB) recently published a 45-page report stating that it was “ready to play a leading role” with the research and development of its digital currency along with the launch of a digital Euro, that will be all across the European nations.
Its been a while since the need for a digital Euro started making rounds, with the expectation that it will aid in cost-effective and instant cross border payments. The Netherlands is eager to be the testing ground for the digital currency as per the report.
The case of Libra also came up in the report, where it was cited that Facebook yet to be launched cryptocurrency is a threat to monetary stability, which is the primary reason why all the central banks are accelerating their efforts towards launching CBDCs.
The decline in the Use of Physical Currency
People are more comfortable with digital payments than carrying physical money these days. In the Netherlands, statistics show that almost two-thirds of all national payments are digital. Hence the central bank is eager to launch a CBDC that will serve the monetary needs of the general population and the businesses in the country.
The COVID-19 Push to all CBDC Projects
The ongoing pandemic crisis has led to the shutting down of businesses across geographies. In that context, the DNB report cited that, in the Netherlands, the businesses that are still operational are declining physical cash as a form of payment. Several stores are directly asking the customers not to pay in cash and urging them to use digital modes of payment.
It is a precautionary measure, considering that the disease spread from human touch and there is the risk of contracting the infection when accepting physical money. Both health issues and the economic downturn, which is a side-effect of the pandemic has led in CBDCs becoming the need of the hour.
The Netherlands is not the only country, that is eager to launch its digital currency followed by a digital Euro, other countries are accelerating their projects as well. The People’s Bank of China has already issued a statement claiming that it is not slowing down in developing the digital yuan. It is, as a matter of fact, one of their utmost priorities at the moment. On the other hand, Sweden and South Korea, have launched their pilot programs to analyze and assess the practicability of launching a central bank digital currency.
European Union members like France have initiated their digital euro project and even the President of the European Central Bank is championing the bank’s role in developing a CBDC. However, fact remains that for digital euro to be developed and launched, all the members must come to a unanimous decision regarding the optimal design, features, and regulatory compliances of currency. If not, then it can lead to confusion or rather major issues with the monetary policies.