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New Head of Bank of International Settlements Outlines Plans for European CBDC

New Head of Bank of International Settlements Outlines Plans for European CBDC

The former European Central Bank (ECB) executive board member Benoit Coeure is known as a starch crypto opponent. However, it now appears that he may be about to change his view somewhat. Specifically, Coeure recently outlined plans for a European central bank digital currency (CBDC).

The ECB is investigating a CBDC

Those keeping tabs on the cryptocurrency market may know Coeure from some spectacular comments regarding Bitcoin. Perhaps most notably, last year Coeure said that Bitcoin was an “evil spawn of the financial crisis”.

Now, however, it looks like Coeure be changing his tune regarding cryptocurrencies. However, it also appears that this change in sentiment only extends to that of central bank digital currencies. 

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At a conference held by the ECB and the National Bank of Belgium, Coeure recently said that CBDCs may become a necessity in the future.

Seeing as Coeure is an outgoing executive board member of the European Central Bank, his word holds significant sway. Moreover, Coeure notes that as the way consumers use their funds change, so will central banks have to adapt.

“A central bank digital currency could ensure that citizens remain able to use central bank money even if cash is eventually no longer used,” Coeure said to those in attendence. 

“A digital currency of this sort could take a variety of forms, the benefits and costs of which the ECB and other central banks are currently investigating.” 

Is an European Union CBDC needed to combat Libra?

Notably, this comes as Facebook is still gearing up to release its own stablecoin cryptocurrency, Libra. Although Facebook is facing some issues with this, observers note that Libra may put substantial pressure of central banks. 

As Facebook wields substantial power and influence, central banks could feel the need to match Libra with their own stablecoins. It is generally believed that this would come in the form of central bank digital currencies, or CBDCs.

Without directly referencing either Libra or Bitcoin, Coeure went on to highlight how “new initiatives” are now putting stress on central banks.

“The current situation has attracted new initiatives that aim to overcome shortcomings in cross-border retail payments by building a new separate payments ecosystem.”

Furthermore, a recent draft document from the European Union states that the trading bloc is considering a common approach to cryptocurrencies. This could further pave the way for a joint understanding of a potential central bank digital currency. Until then, however, Coeure’s comments provide valuable insight into the ECB’s reasoning.