ECB’s Panetta endorses wholesale CBDC through gritted teeth.
If Target2 is difficult to use, market players will turn to commercial bank money and stablecoins, Panetta continued. That would undermine financial stability by fragmenting trading and liquidity and removing central bank money from the process. Besides, stablecoins “are stable in name only.”While he saw the potential for DLT to improve pieces of the settlement system, Panetta considered CBDC’s advantages over existing technologies unproven.
“Importantly, the governance of major DLT technologies and networks is dominated by actors who are either unknown or based outside Europe, which raises concerns about strategic autonomy.”“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.”
The ECB is considering two options for integrating DLT and Target services. The first is to create a bridge between DLT platforms and central bank infrastructures. That course of action would probably be faster to implement than the option of creating “DLT-based wholesale settlement service with DLT-based central bank money.”
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