European Central Bank (ECB) intensifies its work on a Digital Euro

The European Central Bank (ECB) is the central bank of the 19 European Union countries that adopted the Euro. Now, they will also try to adopt Digital Euro. It clearly seems like they are taking very serious actions and important decisions.

The European Central Bank (ECB) recently published a comprehensive report on the possible issuance of a digital euro, prepared by the Eurosystem High-Level Task Force on central bank digital currency (CBDC) and approved by the Governing Council. A digital euro would be an electronic form of central bank money accessible to all citizens and firms – like banknotes, but in a digital form – to make their daily payments in a fast, easy and secure way. It would complement cash, not replace it. The Eurosystem will continue to issue cash in any case.

Christine Lagarde, President of European Central Bank (ECB):

The euro belongs to Europeans and our mission is to be its guardian. Europeans are increasingly turning to digital in the ways they spend, save and invest. Our role is to secure trust in money. This means making sure the euro is fit for the digital age. We should be prepared to issue a digital euro, should the need arise.

The Eurosystem task force, bringing together experts from the ECB and 19 national central banks of the euro area, identified possible scenarios that would require the issuance of a digital euro. These scenarios include an increased demand for electronic payments in the euro area that would require a European risk-free digital means of payment, a significant decline in the use of cash as a means of payment in the euro area, the launch of global private means of payment that might raise regulatory concerns and pose risks for financial stability and consumer protection, and a broad take-up of CBDCs issued by foreign central banks.

Fabio Panetta, Member of the Executive Board of the ECB published an article and he said: We must be prepared to issue a digital euro.

Technology and innovation are changing the way we consume, work and relate to each other. A digital euro would support Europe’s drive towards continued innovation. It would also contribute to its financial sovereignty and strengthen the international role of the euro.

The Governing Council has not taken a decision yet on whether to introduce a digital euro. But there are good news. The Eurosystem will engage widely with citizens, academia, the financial sector and public authorities to assess their needs, as well as the benefits and challenges they expect from the issuance of a digital euro, in detail. A public consultation will be launched on 12 October 2020. Experimentation will start in parallel, without prejudice to the final decision. So in this case, it sounds like we will have a chance to experience digital euro soon.