- Tomas Holub, a board member of the Czech National Bank, has different views regarding the central bank digital currency.
- In a recent interview, Holub has very briefly explained as to why he considers CBDC not a sustainable solution to the country’s economy.
Central Digital Bank Currency or CBDC, as the name suggests, is the digital format of our traditional fiat currency. Although the concept of CBDC is derived from Bitcoin but unlike crypto, CBDC is regulated by the government. CBDC aims at stabilizing our financial systems by improving technological efficiency and financial inclusiveness. Besides, since the money can be traced, it also reduces illicit activities.
Holub Has A Different Notion About CBDC
However, Tomas Holub, a board member of the Czech National Bank, has different views regarding the central bank digital currency. According to him, there are more drawbacks to the digital system than the advantages of implementing him. In a recent interview by 4H Production journalist Martina Sobkova, Holub has very briefly explained as to why he considers CBDC not a sustainable solution to the country’s economy.
A few months ago, the Czech Republic’s currency Koruna experienced a downfall in its exchange rate. However, according to Holub, it has been doing pretty well since March’s market crash.
Central Bank Digital Currency is Helicopter Money
When interrogated about CBDC, Holub told the reporter that the liquidity services given to user accounts are an appealing concept. Initially, he referred to the CBDC as ‘helicopter money,’ but later, he questioned the viability of such a system. Helicopter money often referred to as brand new printed money given to people during the time of recession or any certain crisis. Here the helicopter money is in the context of the ongoing coronavirus pandemic, which has shaken the economic stability of many nations.
Holub has also emphasized the fact that the CBDC has not yet provided the world with answers to specific questions. For instance, the biggest question was the anonymity of the CBDCs. Whether CBDCs are going to be anonymous or not, nobody knows. Another important question is whether the CBDC will comply with the Anti Money Laundering (AML) standards in case they are declared anonymous. And lastly, whether these currencies would be interest-bearing or not.
Czech Central Bank Not Allowed To Issue CBDC
However, Holub told the reporter that these are only a few questions, and many more questions arise when different sectors of the CBDC are considered. The European Legislation standards restrict the Czech Central Bank from its authority to convert all the fiat and issue a digital currency. Lastly, Holub said that a huge part of the country’s currency is still in circulation. The growth of the currency contradicts the idea of issuing a digital currency in a liquidity crisis. However, he mentioned the possibility of the central bank issuing a digital currency in the future persists.