The European Central Bank has announced that in 2023 it will start tests for the introduction of the digital euro, and 2026 is the date when the digital European currency will be fully effective. The Polish central bank is also analyzing the development of central state currency CBDC (Central Bank Digital Currency).
- The specificity of the CBDC, that is to say the digital currency of the central bank, is above all linked to the fact that, unlike cryptocurrencies, it is a means of payment issued only by banks. power stations.
- Recently, work on the CBDC has accelerated. By 2022, the number of central banks working on the CBDC concept has grown to almost 100, according to the Bank for International Settlements (BIS) and the Atlantic Council’s Analytical Center.
- The NBP states that “the results of the analyzes conducted indicate the lack of clear benefits of the introduction of central bank digital currency in Poland in relation to the types of perceived risks associated with its issuance for the economy, monetary circulation and the financial system”.
– Pressure from the EU can impose the pace of work also in the Member States. Although the introduction of the digital zloty in Poland is questionable for many reasons: from the lack of a legal framework to social fears resulting from resistance to state control, explains Klaudia Dąbrowska, partner at Wolf Theiss.
The specificity of the CBDC (Central Bank Digital Currency), that is to say the digital currency of the central bank, is above all linked to the fact that, unlike cryptocurrencies, it is a means of payment issued only by central banks. In principle, it may or may not use blockchain or distributed ledger technology (DLT).
CBDC – state currency
Recently, work on the CBDC has accelerated. Nearly a hundred central banks already manage them. China, as a major player in the CBDC market, has announced that it wants to completely replace the yuan with its digital counterpart eCNY. Facebook has also been working on its own currency. Even SWIFT recently announced that it is entering a preparation phase to start working with the CBDC of centrally controlled digital currencies.
The European Central Bank since April this year. is carrying out public consultations on the possibility of introducing the digital euro and there is a kind of pressure on EU member states from him. There are specific dates, which suggest that the political decision to introduce digital currency in the EU has been taken, and thus – a revolution in the financial services market could be waiting for us, experts say.
ECB President Christina Lagarde does not hide a critical attitude towards cryptocurrencies, while opposing them to the digital euro as a safer way to store value. This was also followed by announcements from the European Commission that the legal framework for the introduction of digital currency in the EU will also be ready next year.
The introduction of a centrally controlled state currency requires the central bank to cooperate with other national banks and other payment service providers, which means designing the cooperation system practically from scratch.
By 2022, the number of central banks working on the CBDC concept has grown to almost 100, according to the Bank for International Settlements (BIS) and the Atlantic Council’s Analytical Center. For now, the leaders in the introduction of CBDC – apart from China – are countries such as: Nigeria, Cambodia, South Africa and Uruguay. Before the war, Ukraine was also one of the leaders, which in July 2021 adopted the law introducing e-hryvnia as a standard means of payment. The prototype of digital Ukrainian currency was tested on the Stellar platform, but in the end e-hryvnia was not introduced into public circulation.
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Advantages and Disadvantages of Central Bank Digital Currency
Among the advantages of introducing digital currency, experts mainly mention its stability. Security is to distinguish the CBDC from the growing popularity of cryptocurrencies. From a financial system perspective, the CBDC would greatly simplify settlements between central and national banks and international settlements. It would also be easier for central banks to react to market developments and even control the economic situation.
The specialists of the European Central Bank speak directly about the chances of economic stimulation caused by the introduction of the digital euro. However, from the point of view of consumers and individual users, concerns related to the introduction of the CBDC cannot be ignored – from the introduction of limits which would imply that the central bank would force users to spend certain amounts within a certain delay, surveillance of each transaction, which threatens to infringe the privacy of personal funds, fear of losing funds, for example as a result of a central bank decision, or fears related to any disposal of funds by the state – experts list.
Public concerns are cited as the biggest obstacle to the widespread introduction of CBDC in many countries. Aware of this, the European Central Bank stresses that cash will not disappear and that the EU CBDC will only be an alternative means of payment, existing alongside the physical euro.
– It seems that it is the absence of a universal need to introduce digital currency in the Polish market and the absence of a legal framework that underlies the restraint of the National Bank of Poland. It is not without reason that in the detailed report on the CBDC, published in May 2021, the NBP mainly focused on monitoring the development possibilities of the CBDC, without undertaking research work aimed at introducing the zloty. digital at the moment, notes Klaudia Dąbrowska.
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CBDC in Poland
The NBP report states that “the results of the analyzes conducted indicate that there are no clear advantages of introducing central bank digital currency in Poland in relation to the types of perceived risks associated with its issuance for the economy. , Money Trading and the Financial System”.
– The CBDC is an innovative form of money, but that does not necessarily mean an innovative payment instrument, especially if it will only be – as it is currently said – an alternative means of payment, existing alongside cash and other payment instruments. Nevertheless, I would not be surprised if there are changes in the banking system after the introduction of the digital euro. It seems obvious that the anonymity in important transactions will disappear and that the limits on exchanges and fundraising will force new users to adopt a new behavior. I have no doubt that we will also face changes in the cryptocurrency market. And this is not a distant future, and the determination of the ECB in this regard could accelerate the work on the CBDC in Poland, especially since there is a real risk that the digital euro will dethrone the zloty – underlines Wolf Theiss expert. – It all depends on the limits of use of the common European digital currency and to what extent it will be popularized. Although it is now too early to answer these questions, it is a factor that should not be ignored, but closely analyzed by the NBP – he adds.
Changes in this respect, according to ECB announcements, can be expected as early as 2023. Fabio Panetta, Member of the ECB Administrative Council, announced during a speech at the National College of Ireland that the test phase of the ECB’s CBDC will begin in 2023 with full implementation scheduled for 2026. Member countries will be able to test the digital euro for three years before the currency can be used publicly.
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