ECB: Central Banks Will Lose Control Without a Digital Currency

Customers and businesses without access to a central bank digital currency will be forced to turn to outside providers for the services, potentially undermining central bank dominance, the European Central Bank said.


Source: Shutterstock


key takeaways

  • Countries that fail to offer a CBDC risk losing power to foreign tech giants
  • CBDCs offer greater security, lower transaction costs and higher accessibility

Central banks that chose not to establish official digital currencies are risking losing autonomy and control over their financial systems, the European Central Bank said. 

“Issuing a central bank digital currency would help to maintain the autonomy of domestic payment systems and the international use of a currency in a digital world,” the ECB said in a report published Wednesday. 

Customers and businesses without access to a central bank digital currency will be forced to turn to outside providers for the services, potentially undermining central bank dominance, the ECB said.

“Attention should be paid to the risks to stability that might arise if a central bank does not offer a digital currency,” the ECB said. “One concern could be a situation in which domestic and cross-border payments are dominated by non-domestic providers, including foreign tech giants potentially offering artificial currencies in the future.”

CBDCs offer greater safety and lower transaction costs, the ECB said. CBDCs also provide greater accessibility because there is no need for financial intermediaries. 

“A CBDC would have the potential to widen access to payment services, promote financial inclusion and lower mark-ups of traditional intermediaries,” the ECB said. “If made interoperable with non-domestic payment systems, it could contribute to filling gaps or correcting inefficiencies in cross-currency payment infrastructures, including for transfers of remittances.” 

If officials are on board, ECB President Christine Lagarde said that a CBDC may be operational in Europe within the next four years. 

As digital assets and blockchain technology continue to infiltrate traditional financial systems, central banks across the globe are being pushed to consider new options. The Bahamas became the first nation to issue an official digital currency with the Sand Dollar’s launch in 2020. The People’s Bank of China is poised to debut its CBDC by the 2022 Olympic Games. On the other hand, the Bank of Canada and the Federal Reserve have both been hesitant to pull the trigger, but have expressed interest in further CBDC research. 


Upcoming Events

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. What you can expect: And more! Don’t miss out on the opportunity to be in the room when the future of crypto is decided. Join us and help shape the future of our […]

recent research

Research report - cover graphics-2.jpg


Base has doubled-down on its commitment to the Superchain vision, has shown early signs of success with nearly $400M in TVL, and has become home to novel dapps such as which has seen significant traction.


The court found that the plaintiffs had “plausibly alleged” that Compound Labs and its associated entities solicited the public to purchase COMP tokens


The investment is part of a larger agreement that includes the supply of 27,000 Bitmain bitcoin miners


The former FTX leader wanted to call seven witnesses, and the judge sided with government in precluding all of them


Aztec co-founders note that a developer testnet will likely be launched next year


Binance spent $840k in gas to consolidate accounts in what some labeled an inefficient process


The FCA expressed concerned that ‘unregistered, overseas’ crypto firms with UK customers haven’t responded to the regulator