Central Bank Board Member Says CBDCs Raise More Questions Than Answers

A board member of the Czech National Bank has provided a less than glowing opinion on the current viability of central bank digital currencies (CBDCs).

• Tomas Holub told 4H Production journalist Martina Sobkova in a wide-ranging interview on Tuesday that the role CBDCs had in providing direct liquidity to clients' accounts was technically an "attractive concept."
• However, Holub stopped short of praising CBDCs, which he dubbed "helicopter money," because he hasn't seen a solution that answers outstanding questions surrounding the nature of CBDCs.
• Helicopter money is a term used to describe newly printed money that distributed publicly to stimulate an economy in a recession or or at times of zero interest rates.
• Those questions included whether digital currency would be anonymous or not, whether anti-money laundering (AML) standards would be applied to the anonymous variant, and if the currencies would be interest-bearing.
• When asking these questions, Holub said, many more arise and he has yet to see any CBDC project that provided full, detailed answers.
• Holub also took aim at Czech law, which he said lacked the power to give the central bank the authority to issue citizens credit in the form of digital currency due to European legislation standards.
• When asked if the Czech Republic would be a pioneer in CBDCs, he said the country's share of currency in circulation is still fairly high and is growing long-term, countering the idea of a liquidity crisis that might prompt such a launch.
• Still, a digital currency from the central bank is a future possibility, Holub said.

See also: Fed Paper: Central Bank Digital Currencies Could Replace Commercial Banks – But at a Cost