The European Central Bank (ECB), a research institution, is examining how blockchain-based bank transactions can increase money control, even if distributed ledgers are adopted by lenders.
Fabio Panetta is a member of the ECB Board. pointed out It was essential to prevent a situation from arising. liquidity Trading would be more fragmented if banks allowed to settle within themselves or used stablecoins.
“Despite the uncertainties surrounding DLT’s potential, we want to be prepared for a scenario where market players adopt DLT for wholesale payments and securities settlement.”
Distributed ledger technology (DLT), which allows market participants to verify transactions, can be used by them instead of relying on central banks. According to the report:
“On top of a digital euro for consumers, the ECB is looking at how it could let banks settle wholesale transactions between them on a distributed ledger, rather than the central bank’s own.”
Based on the popularity and technology of cryptocurrencies, such as Bitcoin (BTC), the ECB is one the world’s central banks who are interested in digital currencies.
The ECB, for instance, launched a public consultation about the Digital Euro, Blockchain. News reported.
Panetta revealed that stablecoins could threaten monetary supremacy. Panetta stated:
“Giving stablecoins the ECB’s backing would outsource the provision of central bank money to private entities, endangering monetary sovereignty.”
Panetta stated that the ECB had sought to find solutions to the gap between the Target 2 settlement system, and Panetta’s. Private Blockchains.
The ECB increased interest rates by 50 basis point (bps) in the meantime, which made its deposit rates zero after a July low of -0.5%. Surprise move, as economists had expected a smaller increase of 25bps.