Comment
Author: Admin | 2025-04-28
Them. 5.4. There Is No Advantage over Electronic PaymentThe small Nordic country of Denmark, following the example of Norway and Sweden, has also valued the option of establishing a CBDC, backed in this case by the Danmarks Nationalbank (DNB). A report published in 2017, which included an analysis of previous works, stated that “In the international debate, several potential benefits of the introduction of CBDC are mentioned, including opportunities to achieve a more effective payment system safe and effective and to establish a backup system for the existing payment infrastructure. However […] in a country like Denmark, with a safe and effective payment system, it is difficult to understand what a CBDC will contribute which is not covered by existing payment solutions. In the Danish context, the digital currency already exists as bank deposits” (Danmarks Nationalbank 2017). However, despite agreeing that current electronic payment systems work, they point out that the spectacular drop in the use of cash is undeniable (at least in Denmark).As we see in Figure 9, the fall in the use of cash has been constant over time. In turn, the use of digital payments has not stopped growing, and with the data available in the last year of the series, it was close to 80%. Therefore, the fundamental reasons for the DNB to reject the implementation of e-krona are that it does not add efficiency or functionality to existing payment solutions, and it would interfere with monetary policy.After the previous report Bjerg and Nielsen (2018) criticized DNB because it overlooks the fact that “money users may also be concerned about the risks that accumulate in the banking sector and, therefore, have a legitimate need for a risk-free place to store their money”; second, they point to another failure of the analysis carried out by the DNB: “the implementation of CBDC would put pressure on the market for banks to manage their businesses in a way that does not expose clients’ money to more risks than justified.” Finally, regarding monetary policy, the authors again criticize the DNB analysis because “the idea of CBDC is rejected by the argument that it would interfere with the crown’s fixed exchange rate policy against the euro” when that would not be the case.Therefore, Denmark has determined that currently the costs of a retail CBDC would outweigh the benefits (Auer and Böhme 2020), while many other countries continue to actively develop CBDC as they consider it “a medium-term possibility” (Boar et al. 2020).As for Israel, its central bank (BoI) released a summary of the work of its interdepartmental team to examine the digital currency and its eventual use in the country’s financial system, the so-called e-shekel. The research found that there is still no adequate basis for a decision to recommend the issuance of digital currency, at least in the medium term (Bank of Israel 2018). This decision is based on two fundamental reasons. The first is somewhat subjective: “So far, no central bank of any advanced economy has issued digital currency
Add Comment