The De Nederlandsche Bank (DNB), Netherland’s central bank, stated that it is ready for research about the digital currency.
In a detailed report published by the bank yesterday, DNB stated that it become “ready to play a leading role” with development of digital euro.
The digital currency will likely make cross-border transfers faster and cheaper for all participating countries.
According to the report, Netherlands would be a proper testing destination.
On the other hand, the central bank indicated that Facebook’s Libra cryptocurrency would possibly threaten monetary stability. “This is the reason why the DNB and other central banks are now considering issuing their own digital currency.”
Use of paper currency falling
The move came in response to the declining use of physical money in the Netherlands, especially as two thirds of payment transactions in the country are digital, according to the report.
As regards the development of the digital currency, the central bank questions in its report “whether central banks should provide a new type of money that is better attuned to the needs of citizens and firms.”
Digital solutions for Covid-19
While Covid-19 pandemic led to liquidation of several businesses worldwide, the report indicated that the businesses that are still operating are those avoiding physical cash:
“Many stores now ask clients specifically not to pay in cash, which effectively means that only private money is accepted.”
The race for central bank digital currencies (CBDCs) is accelerating because banknote became more risky, given the risk of passing on coronavirus and unknown economic conditions.
CBDC to help governments assert control on crypto
Despite governments’ interest in decentralized ledger technology (DLT), the traditional financial system still does not trust cryptocurrencies.
During his speech before the UK Parliament on 4 March, Andrew Bailey, the upcoming governor of the Bank of England, said:
“If you want to buy Bitcoin, be prepared to lose all your money… [Bitcoin] has no intrinsic value.”
Nevertheless, the great efforts that appear to be appropriate for technology such as the launch of the “Venezuelan Petro” and central bank digital currency (CBDC) talks show that the technology is still either deeply misunderstood or considered a threat to the status quo.
Although various types of structures were discovered for CBDC, there is always a certain level of centralization that conflicts with the basic values of Bitcoin and cryptocurrencies: decentralization and volatility.