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Ulrich Bindseil: Digital money in digital wallets

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ECB Tirgus infrastruktūras un maksājumu ģenerāldirektorāta ģenerāldirektora Ulriha Bindseila (Ulrich Bindseil), prezentācija Latvijas Bankas konferencē "Nauda un sabiedrības drošība", kas norisinājās 25.09.2020.

Ulrich Bindseil prezentācija Latvijas Bankas konferencē "Nauda un sabiedrības drošība" , kas norisinājās 25.09.2020.

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Ulrich Bindseil: Digital money in digital wallets

  1. 1. DIGITAL MONEY IN DIGITAL WALLETS - The possible role of CBDC Ulrich Bindseil ECB Latvijas Banka Economic Conference 2020 ECB-UNRESTRICTED
  2. 2. Rubric www.ecb.europa.eu © Why is CBDC considered? - Electronic payments at the POI offer ever higher convenience. Cards, E-commerce, Biometrics, SCA, etc. - Extrapolating current trends implies… - Decline in the use of banknotes and a of usability of central bank money? - Market contestability and competitiveness? Rent extraction from consumers in an oligopolistic market? - Privacy? - Sovereignty? - In view of these trends, is CBDC a natural evolution or revolution of the form of central bank money accessible to all ? 2 Digital money…. and CBDC ECB-UNRESTRICTED FINAL
  3. 3. Rubric www.ecb.europa.eu © Central banking started with account money, and not with banknotes Account based: 1404 Fede di Credito: 17th c Banknotes: 1658-60; 1700- 3 Digital money…. and CBDC ECB-UNRESTRICTED FINAL
  4. 4. Rubric www.ecb.europa.eu © Future of banknotes - Central banks consistently state that they will continue to issue banknotes as long as there is any demand for it - Pros: privacy, resilience and independence, inclusiveness - Experience however shows that usability may decline at some stage because of trends outside the hands of the central bank. Need for public policies to prevent this, if desired by society 4 Digital money…. and CBDC ECB-UNRESTRICTED FINAL
  5. 5. Rubric www.ecb.europa.eu © Private initiatives… According to its Statute, the European Central Bank: • promotes the smooth operation of payment systems • favours an efficient allocation of resources in an open market economy with free competition • In its retail payment strategy of November 2019, the ECB encouraged European private retail payment solutions – Economies of scale from pan-European reach – Reliance on INST would allow for unprecedented efficiency – Comprehensive solutions for the POI (POS, e-commerce / Card and Mobile) • On 2 July 2020, EPI was announced, and the ECB explicitly supported it through a press release as it fulfils objectives of its retail payment strategy 5 Digital money…. and CBDC ECB-UNRESTRICTED FINAL
  6. 6. Rubric www.ecb.europa.eu © Could CBDC suppress private initiatives? Arguments for compatibility between the two: • The electronic payment market is a very large one, and moreover is growing quickly (not only, but also because of a reduced usage of cash at the POI). Co-existence of several means of payments is desirable • Private sector will remain more innovative • CBDC should be integrated in private payment solutions. Central banks are unlikely to have any ambition to take over the front end. • Central banks are unlikely to have any ambition to shrink banks’ balance sheets and see their own ones balloon. 6 Digital money…. and CBDC ECB-UNRESTRICTED FINAL

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