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The European Central Bank (ECB) is considering the possibility of invest in a digital euro designed to integrate cash and support European citizens in daily business operations.
A digital euro to supplement cash
In an October 12 statement to the European Parliament's Committee on Economic and Monetary Affairs, ECB executive committee member Fabio Panetta said the need for a digital euro becomes increasingly evident in an era when European society is quickly moving towards digital payments.
“We don't have a central bank-issued digital currency that we can use for all our daily transactions. A digital euro would fill this gap and be the digital equivalent of euro banknotes. It would complement money, not replace it ”.
Panetta also points out that the digital euro would not invade the privacy of its users. “A digital euro would be compliant with people's fundamental right to privacy: we are already exploring ways to improve it. Unlike private providers, the central bank has no commercial interest in consumer data ”.
Provide Europeans with easy and secure access to money
Although cash is still the preferred mode of transaction in the euro area, its appeal is rapidly waning. In some countries, cash payments fell from 79% in 2016 to 73% in 2019, Panetta notes. And as Europeans move away from cash, Panetta reiterates the ECB's important role in providing Europeans with easy and secure access to money.
“Central banks have the fundamental task of providing citizens with free access to simple, safe and risk-free means of payment”. Panetta also points out that the digital euro would introduce legal, technological and political issues that need to be addressed. He then paused to explain in detail why it is important for the digital euro to be legal tender by deepening the three topics mentioned above.
“In fact, central bank currency is a public good. Euro banknotes perform the main function of providing people with risk-free central bank money. It is essential to ensure that, as a form of public money, a digital euro enjoys universal reach and recognition, as the current legal currency status provides. "
Win the trust of citizens
But the introduction of a digital euro goes beyond the legal or technical question, says Panetta. More important than ensuring that the digital euro is designed to be simple, easy to use and consistent with key policy goals, Panetta says it should be rooted in the trust of citizens.
“To be successful, a digital euro should also receive strong support from the public. It would be a digital symbol of progress and integration in Europe. And it would support the international role of the euro… This is why we are seeking, through the public consultation we launch today, an intense and open dialogue on our recent relationship with citizens and other stakeholders ”. After a period of preparation, the ECB will decide whether to take the initiative forward in mid-2021.
