Credit Manager Magazine 6/2021

51 CREDIT MANAGER MAGAZINE czerwiec / june 2021 MACROECONOMICS interest income on the loan, but it may lose a significant portion of the value of the expo- sure, particularly when the collateral proves to be insufficient. This is why loan applica- tions are usually analysed carefully. Consequently, bank credit supports efficient allocation of resources in the economy, in- cluding effective investment, thus support- ing the growth of the economy’s potential. It would be difficult to guarantee such effi- ciency if the credit process was centralised. All the more so, if the central bank was to directly credit the government, which for ob- vious reasons could often be procyclical and pro-inflationary. This is why, as a rule, in the developed countries the role of central banks in crediting the economy is limited. In the EU direct crediting of governments is com- pletely prohibited (Article 123 of the Treaty on the Functioning of the European Union). The introduction of a widely used CBDC would significantly disrupt the functioning of the modern monetary system and – by ne- cessity – increase the role of the central bank in credit allocation. It seems that precisely because of the signif- icant risks, and at the same time the absence of clear benefits of the possible introduction of a CBDC, the officials of the largest cen- tral banks (including the Federal Reserve of the United States and the European Central Bank) – despite conducting analytical work – avoid unequivocal declarations about the in- troduction of a CBDC in their jurisdictions. Consequently, at the moment it is difficult to judge how realistic the introduction of a CBDC by these central banks is, as well as what form the CBDC would possibly take. At the same time, these banks declare that the aim of introducing a CBDC would not be to replace cash, whose issue is one of the main responsibilities of the central banks. In this context it is also worth paying atten- tion to two central banks that are currently carrying out CBDC pilot tests: the People’s Bank of China and the Sveriges Riksbank. The plans to introduce a CBDC in China should be viewed in the context of the level of development of electronic payments and digitisation of the payment system. Interest- ingly, in China payments can be made even with the use of face recognition technology, Piotr J. Szpunar PhD, is the director of the Economic Analysis Department of the National Bank of Poland (NBP). He has been professionally associated with the NBP since 1995, where he held expert and managerial positions in the areas of monetary policy and financial sta- bility. Graduated from the Academy of CatholicTheology and the National School of Public Administration, he also studied economics and philoso- phy at the Otto-Friedrich Universität in Bamberg. He obtained his PhD in economics in 1999 after completing doctoral studies at the Warsaw School of Economics. He is the author of many publications in the field of eco- nomics and financial stability. thus requiring neither cash, payment card nor smartphone. On the other hand, in Sweden, the main rationale for introducing a CBDC would be the sharp fall in the use of cash. This fall creates many risks, among others, the risk of emergence of private mo- nopolies in the payment system, which the Governor of the Sveriges Riksbank, Stefan Ingves, drew attention to. The introduction of a CBDC by the Sveriges Riksbank would therefore represent a pre-emptive introduc- tion of electronic money of a public nature. It would constitute an alternative to cash, which is disappearing, as well as, above all, to payment systems operated by private enti- ties. The latter, due to the network effects and the benefits of economies of scale, display a natural tendency towards concentration and monopolisation of the market. It seems that the rationale behind the intro- duction of any form of CBDC could be found mainly in the economies where the payment system is less developed. In these economies, a CBDC could be a catalyst of change, pro- moting the development of modern forms of payment, reducing financial exclusion and the costs of functioning of the payment sys- tem, and in some cases also promoting the use of the national currency. Precisely these motives guided the Central Bank of the Baha- mas, to be – as it is believed – the first central bank in the world to introduce a CBCD at the end of 2020, and the National Bank of Cam- bodia to introduce a quasi-CBDC (which the NBC calls rather a new payment system based on elements of a CBDC). In both cases retail clients were not given the possibility to hold a bank account in the central bank, but only a possibility to create a new e-wallet via the financial institutions. At the same time, access to the new form of money is limited in terms of the amount available and this limit is relatively low. This is why the risks to finan- cial stability arising from the introduction of a CBDC are limited, although so far it is too early to draw full conclusions in this regard. In conclusion, although the consequences of introducing a CBDC for central banks and economies would largely depend on its design, in countries with a smoothly func- tioning payment system it is difficult to point to clear benefits related to the possible intro- duction of a CBDC. At the same time, the “Although the consequences of introducing a CBDC for central banks and economies would largely depend on its design, in countries with a smoothly functioning payment system it is difficult to point to clear benefits related to the possible introduction of a CBDC.” introduction of a CBDC could pose serious risks to financial stability due to the outflow of deposits from banks and the increased role of the central bank in crediting the economy. This is why it can be expected that in these countries such money will not be introduced, or will be introduced only in a limited form which will not entail significant risk to finan- cial stability and to the unlimited access of citizens and economic entities to cash and its universal acceptance. The views expressed in this article are the pri- vate views of the author and are not an expres- sion of the official position of NBP.