Lithuanian Central Bank Urges Peers to Join Digital Currency Goldrush

Lithuanian Central Bank Urges Peers to Join Digital Currency Goldrush
10.12.2019 11:45 am

Lithuanian Central Bank Urges Peers to Join Digital Currency Goldrush

Blockchain

The Bank of Lithuania is stepping up its research into the implications of offering a central bank digital currency, publishing a new research paper highlighting CBDC design choices as well as monetary policy and financial stability implications.

The in-depth analysis comes ahead of the central bank's launch of 24,000 digital collector coins created using a blockchain-based approach, and the establishment of a sandbox platform for testing digital ledger projects, LBChain.

“It is fascinating to follow how fast the area of digital assets and currencies is evolving," says Marius Jurgilas, Bank of Lithuania board member. "It is not prudent to be a casual observer, as this puts regulators and supervisors in the anxious position of a parent who is disgruntled to see that his 'parental controls' are completely out of date. The preferred approach is to face the risks and gain hands-on experience in a controlled environment.”

The CBDC debate has gathered a new sense of urgency in central banking circles following Facebook's plans to issue its own stablecoins as a new form of digital money.

Jurgilas believes central banks around the world might find themselves better able to meet the changing financial needs of consumers and businesses by embracing the new technology.

“If we truly aim to insulate the Eurozone from global technology-related threats and provide a competitive advantage to our businesses, European payment strategies must not be based on solutions of the past," he states.

The position paper CBDC: in the whirlpool of discussion presents the CBDC concept and typology, surveys the existing literature, documents the initiatives undertaken by central banks around the world, and discusses policy implications from the perspectives of monetary policy and financial stability.

The paper emphasises that CBDC could promote financial inclusion and cross-border trade, as well as support the economy by providing access to basic payment services and the ultimate safe asset. Yet, certain CBDC designs could contain some risks.

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