In a speech today, German politician Burkhard Balz, a board member of the German Federal Reserve, stated that the digital euro decision is purely political. Balz’s stance on the digital currency contradicts the European Central Bank’s goal to launch a CBDC. Digital Euro launch plans have gained momentum due to the effects of the coronavirus epidemic.
Balz said in a statement:
“Creating the CBDC is a political decision rather than a technical one. Therefore, CBDC should be evaluated comprehensively with alternative options. In particular, what impact such a move will have on society should be analyzed in depth. ”
“Politically, a CBDC could give countries innovation for payment systems, independent of the US dollar. It could also change the regulatory framework of central banks focusing on financial stability and prevention of money laundering. However, these changes will depend on the current governments that run these institutions responsible for financial systems. ”
However, Balz also acknowledged that international dialogue and close cooperation could be held with all of the other central banks involved in a CBDC initiation plan. According to the official, this alliance will help nations experience rapid and significant progress in international payments.
Apart from the Bank of China, which launched the CBDC pilot project, a group of seven central banks, together with the Bank for International Settlement, published a research report stating how central banks can proceed without committing to issue CBDC feasibility.
Balz stated that the digital euro could create political implications for financial stability and the health of the banking system, and for consumers to pay and hold value. Balz is also very concerned about a digital bank where users can convert cash into a digital euro and view CBDC as a store of value rather than a payment instrument. He believes this will further destabilize the entire financial system.