BFM Crypto

Central banks are still struggling to justify the interest of their digital currency projects

[AVIS D’EXPERT] Many central banks are considering implementing digital currencies. Without that we always understand their usefulness. Decryption with our expert Guillaume Almeras, founder of the monitoring and advice site Score Advisor.

Central Bank Digital Currency (MNBC) projects represent a very special subject since it essentially attracts attention by its surreal, even absurd nature! Quite a long time ago, we asked what could be the interest and the usefulness of a digital euro. The question still remains! However, the slew of MNBC announcements continued over the summer.

American banks and a number of crypto-currency players, as well as their European and therefore French counterparts, have expressed concerns that can easily be understood. Since the European Central Bank (ECB) has, like the Federal Reserve Bank, announced that it is pursuing the project of a “modern public currency”, it seems that it is not only a question of making the euro digital – what it already is – but to launch a new currency. But why? For what purpose and under what conditions? Will there be two dollars and two euros, assimilable (we don’t know how) although distinct (we don’t know how far)? A new dollar and a new euro, directly managed by central banks and thus benefiting from a higher level of confidence? And, if they are directly managed by the central banks, does this mean that these will also administer the accounts of those who will hold these new currencies? It would then be the end of commercial banks, since economic agents would have every interest in leaving their deposits in the accounts of their central bank. In the end, the new currency would drive out the old one and all bank accounts would be centralized by the monetary authorities.

In the United States, the Fed has always ruled out this possibility. In China, the e-CNY is distributed through 6 commercial banks. The Swedish Central Bank, one of the most advanced among those of the 25 countries that are currently pursuing an MNBC project – the e-krona project was launched in 2017 and its exploratory phase…constantly renewed since then – has retained a priori a comparable solution, extended to all commercial banks. However, it would be a question of going through the latter to change its crowns into e-krona. It would therefore be a question of another currency and the question arises tirelessly: why? To do what?

Response to new settlement systems

Of course, the real objectives may not be stated and many do not fail in this sense to attribute to central banks dark intentions: the suppression of cash and the surveillance of individuals through the centralization and supervision of their current accounts. , with the possibility of subjecting them to financial penalties in the event of behavior deemed non-compliant.

However, such orientations are actually independent of MNBCs. There is no need for the gigantic gasworks which the management of all bank accounts by the central banks would suppose the setting up, to eliminate the cash or monitor and seize the current accounts of individuals.

Nor are MNBCs needed to implement new request-based and instant payment systems, as illustrated by the recent success of the PIX system launched by the Brazilian Central Bank.

So let’s come up with another explanation. With their plans for digital currencies, central banks may have mostly wanted to respond to the new transnational settlement and exchange systems that have arisen with cryptocurrencies, some of which tomorrow, like Circle, may very well be both global and private. Although the answer still seems very uncertain, it is perhaps above all a question of responding to new models which could render useless not so much the commercial banks as… the central banks.

By Guillaume Almeras, founder of the monitoring and advice site Score Advisor