The Dutch Central Bank wants to be the proving ground for central bank digital currencies (CBDCs) in the European Union.
In a 45-page report released by the bank on April 21, the De Nederlandsche Bank (DNB) said it was “ready to play a leading role” with research and development into its own digital currency as well as a Europe-wide digital currency.
A digital Euro is expected to make cross-border payments faster and cheaper for all member states who participate. The Netherlands would be a suitable testing ground, the report said.
Though not the primary target of the report, the DNB singled out cryptocurrency Libra as a possible threat to monetary stability and conceded it was “the reason why the DNB and other central banks are now considering issuing their own digital currency.”
People are hesitant to use physical money amid pandemic
There has been a surge of people using digital means of payment for day to day transactions since the coronavirus pandemic has begun. The DNB report also noted that stores that remain open amid lockdown are avoiding physical cash. The report says, “many stores now ask clients specifically not to pay in cash, which effectively means that only private money is accepted.” Earlier, the People’s Bank of China, in a statement, said that it would undoubtedly continue its CBDC development.
Both South Korea and Sweden have launched pilot programs to assess the feasibility of issuing a centralized digital currency. Several EU members have recently begun experimenting with a digital euro. The European Central Bank president is also supporting the bank’s involvement in developing a CBDC. However, the Dutch central bank noted that any decision on a digital Euro would require cooperation between member states in Europe.