- The European Central Bank has said Europe should be ready for a digital euro.
- A report has been published, which forms the basis of a public consultation starting on October 12.
- A digital euro would not replace cash, but compliment it.
The European Central Bank (ECB) said today that it must be prepared to issue a digital euro, in light of the way that digitisation is spreading to all areas of life.
Today’s announcement has been timed alongside the publication of a digital euro report, which set out the reasons to issue a digital euro, the potential effects this might have on the continent, as well as the legal consequences that a digital euro might cause. But one thing is for certain: the ECB wants to protect the euro from getting left behind.
“The euro belongs to Europeans and we are its guardian. We should be prepared to issue a digital euro, should the need arise," said Christina Lagarde, president of the ECB.
In today’s announcement, Fabio Panetta, member of the Executive Board of the ECB, addressed the rapid impact digitization is having on societies. "The way we pay is no exception. Our practices are changing - in some countries rapidly so," said Panetta.
The ECB’s report offered an assessment of the economic, strategic, technological and social choices that factor into the creation of a digital euro. It will form the basis of a public consultation launching on October 12, 2020.
Other characteristics of the digital euro set out in the report include cyber resilience and digital efficiency. The report said, “Digital euro services will need to be highly resilient to cyber threats and capable of providing a high level of protection to the financial ecosystem from cyberattackers.” It added that the digital euro should “keep pace with state-of-the-art technology at all times in order to best address the needs of the market.”
The report also clarified that the digital euro would not be a crypto-asset or stablecoin. “The digital euro would be a risk-free form of central bank money, which means that it is issued by the central bank and remains its liability at all times,” the report said, adding that “crypto-assets, in contrast, are not a liability of any entity.”
Panetta further said that the digital euro should be standing at the ready if and when developments make its issuance necessary. While not intended to replace cash, preparations for a digital euro to complement cash must already be underway.