Fabio Panetta delivered the keynote address for the SUERF and BAFFI CAREFIN Centre Conference held at Bocconi University. In his remarks, he became the latest to discuss the possibility for central banks to issue currencies digitally, including those that incorporate elements of cryptocurrencies like bitcoin or some of the concepts that underpin blockchain.
At the same time, Panetta began his keynote by distancing the conversation from cryptocurrencies.
He was quoted as saying (according to a transcript of his remarks published by the Bank of International Settlements):
“In fact – just like banknotes – a [central bank digital currency (CBDC)] would be a liability of the central bank and would be backed by its assets. It would be supported by the credibility of the central bank and ultimately, by the rule of law. Crypto-assets, on the other hand, are a liability belonging to nobody: there is no asset that backs them up and no clear governance structure that can guarantee trust… the value of a CBDC would not suffer from the excessive volatility that affects crypto-assets.”
Of course, by this logic, CBDCs would continue to suffer from the same volatility created by the potential for government intervention on monetary policy, a concern that has been previously linked as a cause for individuals seeking out crypto-assets like bitcoin.
Knowns and unknowns
Panetta did point out other advantages of CBDCs, though.
For example, he highlighted the lower costs of managing digital currency as opposed to a physically distributed currency…