Chairman of the Basel Banking Supervisory Board: Strategic development of digital euro-time and terrorism

Last year, I took this opportunity to mainly talk about the challenges facing the European Central Bank's fiscal policy as a result of the effects of COVID-19 and how we can address those challenges. He also provided an overview of the ECB's valuation strategy, which was completed in July last year.

I also briefly referred to the recently published Digital Euro Report. The report describes the important theoretical foundations of the euro system system in terms of the potential for digital currency coverage by the central bank of the euro area. Today I would like to review this topic and share some thoughts based on the progress made in this area over the past 13 months.

The European digital exchange sows the seeds of the digital euro

Central banks, both inside and outside the euro, discuss and decide what are known as central bank digital currencies. From these assumptions, it is clear that there are many reasons behind the adoption of digital advantages by mid-sized banks.

The first is the need to make people safer and more economically viable, as is the case in Sweden. This is happening in the context where cash no longer fulfills this function because the public uses it less and less, replacing it with another form of private payment.

After this theory, people believe that bank accounts are the only type of currency that recognizes certain advantages, accepting the important role of bank accounts, and confidence in personal money from their dealings with the central bank. This gives the central bank responsibility for "transport" of currency and therefore also serves as a guarantee for the stability of central bank rates, financial stability and the description of the continuity of the payment system.

We must accept and gradually reduce our use of cash as a means of payment. Banks continue to keep the profits of the savings account of the bank, but this will ultimately affect their use of the checking account and finally also the profitability of the bank account as a financial benefit.

In these contexts, digital advantages will help manage the role of the bank in terms of payments, cash additions and transactions as a financial benefit.

Obviously, the initial reason is close to the second, the risks associated with the ability to consolidate financial processes that have too much of an impact on private payments. In this case, there may be a vitality which makes the response weak with heavy training.

These risks are especially important for large tech companies, from traditional businesses to payments and financial midsize. Here, these companies are using large-scale cross-market data to drive rapid growth in these markets. This growth could also be attributed to the development of alternative approaches to medium-term financial institutions such as fixed income coins. This can affect competition, the reliability of external technology, financial security, and financial management.

The third reason digital banking companies have to deal with financial accounting. In many countries this can be very important. Although only a small fraction of the population of these countries has access to the most basic financial services, in these countries access to digital content such as smartphones is more important among the population. China in other countries like this. This overlaps with the reason for financial and law enforcement concerns over the apparent explosion in payments so far. It also prevents the emergence of new suppliers, leading to renewals in paid stores.

In the United States, for example, digital currency could help reduce future declines in the U.S. electronic payments industry and regulate global value as new competitors emerge. . . Another is digital savings by reducing fiat printing costs. There appears to be transportation and transportation following other pioneering projects, such as the Bahamas central bank project. The Central Bank of the Bahamas is an archipelago of more than 700 islands, often threatened by bad weather, and facing serious financial problems.

Some of the reasons mentioned above do not apply to the Eurosystem. The euro system was decided to explore the introduction of a new form of financial institution which, like cash, applies to both households and businesses. However, unlike cash, it relies on the digital medium, which is the digital euro rather than the physical medium.

However, one of the main reasons for the adoption of the digital euro in Europe is that our community is changing rapidly and more and more people are committed to supporting and implementing this process. .

This is, for example, a clear reason why the European Commission has supported the integration of digital plans for the euro area that the Eurosystem could develop in the future. This support comes from a speech delivered by German President von der Leyen during his State of the Union EU 2020 address. In his words, he pleaded for the rapid digitization process of the EU. European Union as a cornerstone of modern European economy and reform. The concept was already contracted out in the Digital Agenda 2030, which established a detailed governance framework.

Among these initiatives, the potential of new technologies to become a vector for the bank's digital development projects has been clearly demonstrated. In this regard, the digital euro was seen as an important tool for maximizing the benefits of payments, supporting the global role of our interests and strengthening the autonomous governance of the EU.

In this case, we are working in a Euro System that can be found as one of our public rights. Whether it is the EU grade or level worldwide, it will suffer from digital changes. Coling.

The digital euro of the future will be part of a larger measure. Examples will include the management and prudent treatment of crypto industry assets, measures to strengthen cybersecurity, and advances in the development of governance procedures for the development of intellectual property. Other priorities include cloud computing and the generation of necessary data as an administrative process.

As with the implementation of the digital euro, all of these improvements are generally different from the whole. They called on other police officers and policymakers to take a similar approach and work together to transition to a new, more digital state in a fairer and more equitable manner in line with the needs of all human beings.

Exporting digital transactions in euros in a changing environment

Let us now briefly describe how the euro system works in the perspective of the digital euro.

As I said, the first important point related to the completion of the main concept analysis was announced in October 2020. The way forward is to decide on the ground rules that the digital euro must follow, to determine the circumstances in which the digital euro is to be determined, provide a first assessment of the potential impact of the export of the digital euro on finance and finance, and Support research. design options.

Our second challenge in 2020 is to make the public want to understand the attitudes and preferences of consumers and businesses. Ultimately, the success of the digital future of the euro will depend on its widespread adoption in payments regulation. In fact, it is the largest public consultation in the history of the European central banking system, with over 8,000 exports. However, in addition to identifying the interest in the digital euro, the move will allow consumers and businesses to enjoy privacy, security and payment at all times across the euro area. Although this is only the first contact, this information has no value, of course this information will be taken into account in the future when determining which digital euro process to accept.

Last July, a meeting of the board of directors of the European Central Bank approved the "clinical phase" of the publication of the Digital Euro project and now in its infancy. Our goal over the next two years is to explore the various design and sample delivery options. To do this, one or more design models were created and visualized in more depth. In particular, our objective is to identify standards for the promotion, movement and marketing of the digital euro in order to minimize the impact of the digital euro on the safety and health of financial and financial systems while meeting to people's needs.

As you can imagine, this is an exercise that needs to be mixed up differently. There is no doubt that two years is enough to explain the magnitude of this challenge. In order to fully understand the impact of the digital euro in all areas of the euro system, a new growth model of the euro system has been developed.

At the same time, we will continue to work with the European Commission to identify the needs of regulatory authorities and others related to the European digital concept.

We will also deepen our understanding of the nature and potential of digital advantages and strengthen international cooperation to foster partnerships with other countries.

Furthermore, the success of the future digital euro will be without an understanding of the needs of all stakeholders, including consumers and business representatives. To this end, a team of consultants consisting of 30 industry experts with experience and expertise in the European micropayment industry has been assembled. These groups will serve as a forum for in-depth discussion on the use of the euro and the financial markets for creating and exporting digital euros.

The project also plans to disseminate communications with users (citizens and businesses) to better understand their needs and preferences in order to create a digital euro that rewards everyone.

The digital euro: the challenge and the opportunity

The purpose of this guide is to prepare you to make the right decisions. So far we want to make it clear that we have decided and are ready to create the digital euro if circumstances allow.

The final decision on the future of the digital euro currency, including its unique design, will depend on careful thought and common sense to determine its benefits and risks. .

In this regard, one of the most dangerous aspects of introducing a digital euro is that it can disrupt operations and financial management that have already worked well and do not require change.

However, it should be remembered that the recent success of digitization after the digital banking adventure is the same as the growing confusion over the rules of finance. In fact, they lead to the fragmentation and decentralization of traditional pride chains.

A well-established digital euro here could be the real-time equivalent of some of the above models. Like global security, these models can change the way money and credit are created in a market.

Sovereign digital currencies can prevent future mergers and acquisitions in the face of conflict and discrimination, increasing the ability to control business or conflict, for the financial security of end users and elites. In short, the smart digital euro can compete in healthcare by providing value-added and value-added services while encouraging consumer choice.

The digital euro could also become an integral part of the European settlement cycle through central bank reform. This important role can continue beyond payment. For example, it can establish a framework for the design and identification of electronic signals or to facilitate the improvement of other interfaces, such as data distribution models.

When it comes to DLT, I would say the relationship between technology and digital benefits is a two-way street. It is true that the more advanced the technology, the faster the digital output. Otherwise, as in many euro area countries, the digital euro currency could support and encourage the development of this technology. Singapore is a good example. As part of the sovereign digital currency research process, Singapore last year developed design concepts and interventions that could impact the blockchain network in various industries. It creates a business that has never been seen before.

I have to say that there is potential for the digital euro in the future. Given the weight of the euro in the euro area and in the global economy, the euro digital currency can also play an important role in improving the performance, including, quickly, and transparency of G20 cross-border payments. Achieving this goal will require fostering partnerships with central banks in different regions to foster the integration of real digital real estate and collaboration with their design tsim.

In short, a well-developed digital currency will be one of the major commitments across the world to support European financial and payment systems so that they adapt to the needs of the digital trading environment. Key elements of these measures such as consumer protection, privacy protection, financial protection and competitive support are retained.

That said, one of the key principles expressed by the euro system and central banks in the other decision is that the new digital currency must be free from damage. . In particular, the spread of digital benefits should not affect the cost of security or stability of financial and monetary systems.

In this regard, it should be recognized that digital advantages can have a major impact on the financial sector. It can also change the way current payments are made by financial institutions or the deposits currently available with banks. This can have a negative impact on financial security, especially in times of crisis, when the number of people willing to deposit with medium-sized banks may increase. .

In addition, these unwanted effects can be felt all over the world. This is when non-residents can use digital benefits and interfere with payments for other benefits. Clearly, the use of digital currencies outside a country or region would increase the risk of trading digital currencies (this risk would be particularly high in new countries). ) and can trigger a global shock, You can switch roles. other finances.

The risks of digital bank loans are real and should be assessed before they are announced. In fact, they can affect the distribution of products, especially the design.

To deal with this risk, the first option (which seems to be the best option for many countries) could be a direct distribution model in which the digital bank is placed in the hands of the public through financial management intermediaries. . This means that the central bank will continue to provide stable profits, while the central bank will provide other services to the public. The digital euro may not become a private competitor, but the private sector will play an important role in adoption and employment.

Second, to regulate financial security, the restriction can be set at the equivalent of the digital number in euros, and penalties will be imposed if the limit is too high. The question here is how to set these limits to avoid financial security, while at the same time becoming the main goal of promoting digital profits: means that the payout is good.

Third, we need to identify the design of these digital advantages and extend the protection of the above-mentioned global resources to non-citizens. And in any case, international cooperation will again play an important role in creating digital euros. In other words, the potential positive impact on global payments should be noted, but the risks to the global economy are limited.

Therefore

The direction of the development of the digital euro has not yet been determined, but our work on the current euro system from an unexpected perspective is undoubtedly necessary.

Our work has to be stable and it starts well when something happens. We want to make sure that all future digital euros are not compromised financially and financially. To do this, we need to conduct a comprehensive and timely assessment to select the best design for the different situations that will lead to the strongest implementation.

At the same time, we have to recognize that the market is growing rapidly, so today the reality will be different from what we will be facing in a few years. On this basis, the choice of the design and the transfer to the digital euro cannot be limited to interpreting the characteristics that can be achieved in the current payment. You have to think of other things that can change this into future events. In short, you have to prepare quickly, with a flexible and objective vision, adapt to a change of environment, but above all, be safe. Unlike the sweeping changes in financial services that we are seeing now, inaction of public policy is clearly impossible.