August 2, 2021

How Does A Central Bank Innovate On CBDCs When They Belong To A Currency Union? Lithuania Chose Numismatics Based NFTs

When a country belongs to a currency union, for all intents and purposes the money is exogenous to that country, in other words the central bank of the country does not control the issuance of the currency. The Eurozone, comprised of 19 countries who have adopted the Euro belong to the euro currency union. The ECB, which is governed by a president and a board of the heads of national central banks, sets the monetary policy of the zone. Even though the head of a country’s central bank has influence over the monetary policy, in practice it would be hard for any one country to influence the EU monetary policy significantly. We saw how this worked out for Greece during the Grexit furor. When sovereign debts are denominated in an exogenous currency, the interest rates on that debt is purely a function of the market, through which mechanism speculators and other operators can inflict…

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