The European Central Bank announced on Friday, October 2, 2020, that it will start experimenting with a digital version of the euro. In parallel, it will organize a public consultation before introducing this technology.
“The euro belongs to Europeans, and our mission is to be its guardian,” said ECB President Christine Lagarde. “Europeans are increasingly using digital media when they spend, save and invest. Our role is to ensure confidence in the currency. This means ensuring that the euro adapts to the digital age. We should be prepared to issue a digital euro if we are to be needed, “Lagarde added.
ECB stressed that a digital euro currency would be an electronic form of central bank money that would be accessible to all citizens and businesses, such as banknotes, but in digital format, to make daily payments quickly, easily, and securely. This would complete the cash, without replacing it. The Eurosystem will in any case continue to issue cash.
The Frankfurt Institution says the Eurosystem will initiate a broad dialogue with citizens, academia, the financial sector, and public authorities to assess in detail their needs, as well as the advantages and difficulties they expect the digital euro issuance to generate. A public consultation will be launched on October 12. The ECB stated that, in parallel, an experimental phase would be initiated, without prejudice to the final decision.
Eurosystem Task Force, which brings together experts from the ECB and 19 euro area national central banks, has identified possible scenarios that would require the issuance of a digital euro. These include: increased demand for electronic payments in the euro area that would require a risk-free European digital means of payment, a significant reduction in the use of cash as a means of payment in the euro area, the launch of private means of payment worldwide that it could generate regulatory concerns and pose risks to financial stability and consumer protection, as well as massive use of central bank digital currencies issued by foreign central banks.
“Technology and innovation are transforming the way we consume, work, and interact,” said Fabio Panetta, a member of the ECB’s Executive Board and chairman of the task force. “A digital euro currency would support Europe’s drive for continuous innovation. It would also contribute to its financial sovereignty and strengthen the euro’s international role,” added Fabio Panetta.
However, the Frankfurt institution points out that the euro’s guardians have not yet made a decision on the possibility of introducing a digital euro.