Volker Wieland finds digital currencies attractive for developing countries (Finanz und Wirtschaft)

Central banks around the world are looking into the introduction of a digital central bank money. According to Prof. Volker Wieland, this could make sense for developing countries. "The idea is attractive for developing countries with a lack of payment systems and countries where there is no independent central bank and there are high inflation risks," he said in an interview with the Swiss business newspaper Finanz und Wirtschaft.

In industrialized countries, Wieland sees possible applications in online retailing, for example. "In the current negative interest rate environment, a stable coin offered at least at 0% interest or even with a slightly positive interest rate could gain market share at the expense of central bank money," Wieland said.

But with the use of digital currencies, the central bank would miss out on seignoriage, the profit from money creation. "Just as the ECB does not want the euro area to be dollarized, it does not want it to be diem-ized. Because even then, the demand for euros decreases and the demand for dollars increases, because the diem will be tied to the dollar."

Finanz und Wirtschaft:
"Digitalwährungen und die Zukunft der Geldpolitik" (€)
"Ein Angriff auf die Notenbanken" (PDF)