CBDCs only solution to 'smooth continuation' of the monetary system: ECB

cointelegraph.com:

The European Central Bank (ECB) says the introduction of digital cash in the form of central bank digital currencies (CBDCs) appears to be the "only solution" that will guarantee a "smooth continuation" of the current monetary system. 

The comments were made as part of an ECB Working Paper Series, which was published in August, discussing monetary policy and financial stability as it relates to CBDCs — gathering insights from 150 academic papers on the subject. 

The paper began with the observation that interest in “the economics of money and payments” has increased dramatically in the past 15 years and expanded beyond a narrow academic circle.

After an examination of that process, the paper introduces motives for the creation of a CBDC and the thorny privacy issues related to it. The authors observed:

Nonetheless, the paper concludes that the introduction of CBDCs is “the only solution to guarantee a smooth continuation of the current monetary system” as physical money loses its economic “fitness” and cryptocurrencies and BigTech (large digital platforms) continue to make inroads into the financial system, noting: 

The importance of central banks achieving the right level of CBDC “take-up” was stressed, and the authors also looked at potential regulatory action that could help CBDCs achieve their goals.

The paper also dismisses concerns that CBDCs could cause shrinkage of the credit supply, noting claims that CBDCs could be a potentially disruptive force were unfounded. Privacy was identified as an area where more research is needed, as was end-user preferences for CBDC functions.

Related: Official explains why China CBDC should not be as anonymous as cash

This is the second paper devoted to crypto issues released by the ECB