De Nederlandsche Bank (DNB), the Netherlands’ central banking authority, has made public its interest in exploring the advantages of digital money to the maximum. The governing financial institution of the Netherlands made this known in a recently published bulletin.
DNB Chooses Digital Money
The bulletin by the DNB sets an agenda that predicts the eventual prominence of digital money in the Netherlands, and globally. In a separate report, however, the financial institution confirmed that it has grown more interested in the argument for the public acceptance of digital currencies. The DNB further highlights the benefits of issuing government-supported digital money, in that it will “promote diversity in the payments market.”
The central bank reports that the borderless opportunities of digital money align with the future of trade in the Netherlands and the EU at large. Meanwhile, the leading financial organization maintains that the opportunities entrenched in digital finance come with risks too. For instance, the DNB highlighted that digital finance could also exacerbate the risk of a bank run.
“A question that naturally springs to mind is whether central banks should provide a new type of money that is better attuned to the needs of citizens and firms, “the bank explained.
Having understood the constraints of physical money and the growing decline of paper-money transactions in the Netherlands, there remains the question of what the future holds.
Central Bank Digital Currency of the Netherlands
On its proposed digital finance solution, the DNB says:
“[A] programmable account and crypto-based digital euro should be created, and its interoperability with book money ensured. The condition for this is establishing a common pan-European payments platform for the programmable digital euro.”
The country’s CBDC would be a solution to Eurocentric and global payment needs. The DNB also claims that the asset could possibly be based on some of the specific technologies which already exist in the crypto world.
The bank maintained that the CBDC would need to focus on the needs of its European users. Therefore, it has called for a robust in-house policy debate concerning the CBDC and the future of digital payments in the Netherlands.
The DNB has unequivocally stated that the bank would like to play a leading role in creating the innovative digital money system if it ever got Eurocentric approval. As the statement explains, the CBDC would be in its balance sheet – unlike fiat currencies.
If the DNB does decide to move forward with this payment system, it wouldn’t be the first to do so. For instance, the European Central Bank itself has expressed its desire to iterating such a payment system.
Are Other Central Banks Embracing Digital Money?
The DNB is not alone in the strides towards borderless digital payments. Several central banks in the world, including the People’s Bank of China, are lending their voice toward the digital project transformation.
Reports confirmed that a beta app linked to initial iterations by the People’s Bank was recently made available to the public. Results from the test will play a major part in the next steps taken by the Chinese towards institutionalizing the digital economy. Undoubtedly, it will serve as a model for other nations of the world to follow too.