Germany’s central bank chief, Joachim Nagel, is pushing for a digital euro. He believes a central bank digital currency (CBDC) is key to Europe’s future economic strength and independence.
Protecting Europe’s Financial Sovereignty
Nagel, president of the Deutsche Bundesbank, sees a CBDC as a way to protect the Eurozone from threats posed by the growing dominance of US payment companies. He worries these companies could be used as financial weapons in a digital world, making a European digital currency a necessary safeguard.
A Public Good, Not a Bitcoin Alternative
Nagel views CBDCs as a public service that central banks should provide. He’s strongly against Bitcoin becoming a reserve currency, calling it a “digital tulip” – opaque and unreliable – and unsuitable for central bank balance sheets.
Uncertain Impact on Interest Rates
While advocating for a digital euro, Nagel admits it’s still unclear how CBDCs and digitalization will affect interest rates and the European Central Bank’s efforts to maintain price stability and full employment.