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CBDCs now a hot topic in Ireland as well

Central Bank of Ireland Governor Gabriel Makhlouf wrote about CBDCs and other virtual currencies in a blog post
Ireland

Central Bank of Ireland Governor Gabriel Makhlouf wrote about CBDCs and other virtual currencies in a blog post.

Makhlouf thinks that while the European Bank is still exploring the possibility of issuing a digital euro, it is very likely for it to happen in the future. Central bank digital currencies (CBDCs) will not make money disappear, instead, it will only contribute to it. The development would be a “fundamental shift” for Eurozone’s financial system according to the governor.

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Gabriel Makhlouf CBDCs

“We have a responsibility to consider these issues to ensure money remains fit for purpose as a public good. And although we haven’t decided whether a digital euro will be introduced, I think it’s very likely to happen. In my view, it’s not a question of “if” but rather “how and when”. To be clear, cash won’t disappear; a digital euro will complement it.”

Gabriel Makhlouf

Gabriel Makhlouf also gave his opinion on cryptocurrencies. He doesn’t think they are a real kind of currency amid volatility and criminal usage. Hence, the negative elements surrounding these types of assets exceed the positive ones. This doesn’t mean we should ignore the Distributed Ledger Technology behind them.

“The “currency” label implies that the characteristics of money exist when in fact they don’t: the value of Bitcoin, for example, experiences massive fluctuations making it unsuitable as a store of value. It’s not a useful medium of exchange or a unit of account given the limited number of businesses and individuals willing to use it for transactions.”

Gabriel Makhlouf

Ireland isn’t the first country to explore the idea of a CBDC. The central bank of Canada published a paper titled “The Positive Case for a CBDC” earlier this month. The study noted that a national digital currency could be an effective competition policy tool for payments, eliminating transaction fees from credit and debit cards.

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