The future of central banks hinges on a reevaluation of their business model and the swift adoption of central bank digital currencies (CBDCs), according to Joachim Nagel, the president of the Bundesbank and a member of the European Central Bank (ECB).
During a panel session at the Bank for International Settlements’ Innovation Summit on May 6, Nagel reportedly expressed concerns about the uncertainty surrounding central banks. He stated, “If you had asked me 20 years ago whether the central bank business model was destructible or not, I would have said no.” Nagel emphasized the need to incorporate distributed ledger technology as physical money loses its appeal. He emphasized, “We must accelerate progress in this area… When a fundamental part of your product loses its appeal, it is imperative to contemplate a new core product.”
The French member of the ECB, Francois Villeroy de Galhau, also discussed central banks and emerging technologies during the BIS conference. Galhau reportedly recommended that banks explore the use of digital currencies for both wholesale and retail transactions.
The ECB is presently developing a digital version of the euro after completing the investigation phase to determine its design and technical specifications. The project is expected to be finalized by October 2025.
Source: BIS
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