May 27, 2019

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

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