- Europe must prepare to launch a digital euro to help citizens access money in a fast-changing digital landscape, the European Central Bank said on Friday.
- “We should be ready to issue a digital euro if and when developments around us make it necessary,” said Fabio Panetta, an executive board member at the bank.
- A digital euro would help in scenarios where people stop using cash significantly, if other forms of electronic payment are unavailable, or if foreign digital money took over, the bank said.
- Main concerns include potential cyber risks, privacy, and whether the central bank would acquire sensitive information on users.
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Europe must prepare to introduce a digital euro “if and when” necessary to complement cash payments, Fabio Panetta, member of the European Central Bank’s executive board, said on Friday.
In a study published by the bank, the ECB said a digital euro would help citizens with access to quick money in a fast-changing digital world.
The study showed it would not just provide an alternative to making retail payments but would be essential in other scenarios such as:
- If the use of cash declined exceptionally
- Other means of electronic payment become unavailable
- If foreign forms of digital money took over
“We should be ready to issue a digital euro if and when developments around us make it necessary,” Panetta said in a blog post related to the study. “This means that we already need to be preparing for it.”
After main concerns raised within the report are addressed, the bank said the Eurosystem â€” or the monetary authority of the eurozone â€” would decide by the middle of next year whether to go forward with the proposal.
Last week, ECB president Christine Lagarde said a digital euro could provide an alternative to “private digital currencies,” as well as a complement to cash.
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The Eurosystem will have to consider significant concerns such as potential cyber risks, right to privacy, and whether a central bank introducing a digital currency means that it would acquire sensitive information on users.
It will also have to look into legal considerations such as the implications of different design features and the basis for issuance.
The People’s Bank of China started trialling its digital currency in four major cities earlier this year, according to the Guardian. It is the world’s first digital currency operated by a major central bank.
Sweden’s Riksbank has been testing an electronic form of the krona for several months.
But the US Federal Reserve, the Bank of England, and the Bank of Japan are all more cautious on the introduction of central bank digital currencies.
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