The European central bank executive director, is actively considering the issue of central bank monetary figures
The European Central Bank (ECB) executive director at YvesMersch local time on Monday in a speech, the European Central Bank to discuss how to design, the central bank issued and management of digital currency, digital currency and cash will be parallel with cash and has similar anonymity.
The central bank digital currency proposed by YvesMersch or digital monetary base (DBM) is a digital equivalent of the money, and the Central Bank of its ownership. Mersch said that the deposit reserve in the form of DBM already to the central bank for commercial banks to exist. Ordinary families and non bank institutions did not participate, a new DBM will include everyone.
Two models of central bank digital currency
Mersch discusses two modes of central bank digital currency: one is based on the account, the other is based on the value of the. He also said the blockchain technology has the ability to support the two systems.
For accounts based on DBM, the central bank will be for all the relevant non bank accounts, and directly involved in all funds transfer between accounts, similar to today’s Bank account. This form without electronic wallet, but the central bank can control funds, and view the complete circulation of history.
Another option is that the value of DBM based on the design is very close to the bitcoin, imitate the function of cash. Non banks can have their own electronic wallet, used to hold and use DBM. With cash, the central bank can not participate in the transfer of funds, and there is no public history searchable, funds be debited and credited directly in between the electronic wallet.
Mersch explained: “the transfer of DBM without the central bank can participate in the electronic wallet on in to lend, and credited in favour of equipment.”
Only the value based DBM can be done on the central bank’s anonymous. These factors will affect the non bank demand for DBM.
The central bank digital currency motivation
Mersch said that now is the best time to consider the central bank’s digital currency mechanism, there are two reasons.
First of all, with the popularity of electronic payment, the public demand for the central bank’s digital currency will rise. At present, the commercial bank offers a variety of electronic means of payment, including credit cards, debit cards and prepaid cards. Mersch said: “people tend to use the products issued by the central bank, to avoid the default risk of commercial banks.”
Second, the development of new technologies, such as “blockchain, Mersch think it can make the introduction of DBM is more simple, and the R & D cost far less than 10 years ago.
Cash will not be abolished
The idea that the central bank will abolish the cash, this Mersch stressed: “if the non bank party DBM really get into, then at least in the foreseeable future, it will coexist and cash.” He added that the central bank digital currency “just another non bank to choose to spend money.”
Although Sweden and Denmark and other European countries, the use of cash rate is very low, but Mersch said in the euro zone, “the people of real money demand has far exceeded the economic output”.
Before the DBM was released, the European Central Bank need to understand the options available, and the meaning behind. Mersch said: “we need to ensure that DBM does not have a negative economic impact, and ensure the efficient and safe operation system.”
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