Europe should be ready to adopt a digital euro so residents can access money amid the evolving retail payment landscape. That’s the message of the European Central Bank (ECB), the lead institution of the 19 European Union countries which have adopted the euro, the Financial Times (FT) reported.
“Europeans are increasingly turning to digital in the ways they spend, save and invest,” Christine Lagarde, ECB president, said in a statement to the news service. “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.”
In a 53-page report, the ECB wrote a digital euro could support the Eurosystem’s objectives by providing Europeans with access to a safe form of money in the fast-changing digital world. It would support Europe’s drive towards continued innovation. It would also contribute to its autonomy by providing an alternative to foreign payment providers for fast and efficient payments around the globe, the report said.
“Our role is to secure trust in money,” Lagarde and Fabio Panetta, an ECB executive board member and chair of the Eurosystem High-Level Task Force on Central Bank Digital Currency, wrote in the reports’ executive summary.
The ECB makes the case for a digital euro as the agency attempts to stay ahead of the evolving digital currencies and payments market, the news service reported. It has laid out two ways to implement digital euro transactions. In the first option, the ECB would record all such transactions, while a in second decentralized alternative, the ECB would set the rules for transactions to be recorded by intermediaries.
While other banks are far ahead of the ECB with digital euro projects of their own, the EU’s central bank is playing catch-up.
The Swiss National Bank, Sweden’s Riksbank and the People’s Bank of China are working on the transition. This has raised concerns that the eurozone could lose control of its money supply, FT reported.
“By providing digital payments, the Eurosystem could ensure that European citizens have access to payments at the technological frontier,” the report said. “This would preserve the global reputation of the euro, not least if other major foreign central banks press ahead with issuing CBDC (Central Bank digital currency).”