Fabio Panetta, a member of the European Central Bank’s (ECB) executive board, detailed the roadmap for the successful inclusion of a “digital euro” on Friday.
- The ECB is examining whether to introduce a central bank digital currency (CBDC) for retail payments, Panetta said in a speech at the Elcano Royal Institute, Madrid.
- If payment trends in the European Union (EU) continue, cash could quickly lose its central role and become a redundant way of settling bills.
- “Just as the postage stamp lost much of its usefulness with the arrival of the internet and email, so, too, could cash lose relevance in an economy that is becoming increasingly digital,” Panetta said.
- The ECB, which had been discussing a CBDC since the start of the year, said in July it was moving to a more investigative phase that will last 24 months. A decision on whether to issue one would be made at a later stage, and that it was not envisaged to replace cash, Panetta said at the time.
- Having a digital euro would allow people to continue using central bank money as a means of exchange in the digital era. The CBDC would have to be designed in a way that is attractive enough to become a widely used payment mechanism.
- It should not, however, be viewed as a competitor to private payment services, he said. The digital euro should expand payment solutions without crowding out private payment services.
- He said the ECB might issue a digital currency in order to safeguard consumer access to central bank money.
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