Chair of Bank of Lithuania Speaks on Central Bank Digital Currencies
Vitas Vasiliauskas, who is the Chairman of the Board of the Bank of Lithuania and a member of the ECB Governing Council, spoke at the Reinventing Bretton Woods Committee conference in Washington DC about the bank's stance on the central bank digital currencies (CBDCs). He stated that "the Bank of Lithuania is part of the Eurosystem. For us, any significant step in the field of CBDCs would require action at the ECB level. For now, this seems like quite a distant prospect." However, according to him, the wholesale CBDC seems like a more viable option going forward, as opposed to the retail CBDC.
While speaking at the conference, Mr. Vasiliauskas described what a CBDC is and mentioned that a CBDC would be "fundamentally different from private crypto assets. This is because it would be- money! ... CBDCs represent one of the most intriguing and complex ideas in current discussions ... ." However, he added that the Bank of Lithuania is generally "fond of financial innovation" and has plans to open a new generation technological sandbox for testing blockchain solutions (called LBChain). Therefore, the bank does not "reject the potential that CBDCs carry. Yet at this point we remain cautious." According to him, the bank's future position in this domain will be based on a rigorous cost-benefit analysis, after considering the possible alternatives. For instance, the Bank of Lithuania already provides an effective payments infrastructure titled Centrolink. The system supports 24/7 instant payments and is accessible for all payment service operators, including fintech companies.
He concluded that, after assessing the balance between risks and benefits from the perspective of generally conservative central banks, the wholesale CBDC seems like a more viable option going forward, as opposed to the retail CBDC. "However, we feel the need to acquire a better theoretical understanding of the way any sort of CBDC would function and learn from practical pilot experiments. Notably, research and monitoring carried out by international organizations, such as the IMF or standard-setting bodies, could play an important part in finding an optimal future design."
Related Link: Speech
Keywords: Europe, EU, Lithuania, Banking, CBDC, Crypto Assets, Distributed Ledger Technology, Wholesale CBDC, Digital Currencies, Fintech, Bank of Lithuania, BIS
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.