Dutch Central Bank Volunteers For Taking The Leading Role In Digital Euro Development

Central banks across the globe are increasingly focused on having a digital currency, especially after the shady economic outlook owing to the COVID-19 pandemic. China has already pull the levers and accelerated the development of its Digital Yuan.

Looking at the European Union, the Dutch Central Bank has showed its willingness to play a ‘leading role’ in the development of a central bank digital currency (CBDC) for the European Union.

The De Nederlandsche Bank (DNB) is taking all measures to bring the Digital Euro to the market thereby being the first monetary regulator in the entire Eurozone to start working on the CBDC project.

In its 45-page report, the Dutch central bank has noted all the benefits that a pan-Euro digital currency will bring to all the members of the European Union. By leveraging the blockchain technology, a Digital Euro will make transactions cheaper and faster for all the participating member states.

DNB has said that the central bank considers Netherlands as the suitable platform for testing this project before it goes pan Europe. Interestingly, DNB didn’t fail to target Facebook’s Libra for undermining the financial stability and added that it was “the reason why the DNB and other central banks are now considering issuing their own digital currency”. However, Facebook has recently announced scaling back its Libra project and supporting only the central-bank-enabled digital currencies.

One of the major reasons DNB is much more interested in this project is that the need for reducing the use of paper-money in Netherlands. Currently, 65% of all transactions in the country happen in digital manner. The DNB looks committed to reduce the remaining gap.

In the report, DNB also taps into the current fragile global economic scenario due to the Coronavirus pandemic. DNB says that the pandemic has forced several businesses to shut down operations. Besides, the ones that continue to operate are inclined towards avoiding any physical cash.

“Many stores now ask clients specifically not to pay in cash, which effectively means that only private money is accepted,” the Dutch central bank said. Of course, the reason to avoid physical cash is to avoid any point of contact for money transfer to reduce the virus spread.

Also, having digital payments systems in place helps businesses to maintain transparency with the banks and government regulators. This helps them in raising money from the market when required.

Other EU members like France have also been working on the CBDC matter for a long period of time. In the past, the European Central Bank (ECB) has also encouraged working in this matter.