The European Central Bank said in a report released on October 2 that by mid-2021, the European Central Bank may begin to seriously consider and study the digital euro.
This report examines how the digital euro may affect retail payments and how to protect payments in the future. It also explores how virtual currencies can be integrated into the entire euro system. However, the report did not specify which model the European Central Bank should adopt when designing its digital currency.
According to this report, the European Central Bank may launch a virtual currency program in the middle of next year “to ensure meaningful answers to unresolved issues raised”, and there may be an investigation phase to develop a digital euro. And experiment. It added that before discussing the issuance, the European Central Bank needs to consider the views of different stakeholders.
This report pointed out that digital currency can bring more financial convenience:
“The potential advantages of the digital euro and the rapid changes in the retail payment landscape mean that the euro system needs to have the ability to issue it in the future. In the rapidly changing digital field, the digital euro can provide citizens with a safe form of currency. Achieve the goal of supporting the euro system. This will support Europe’s drive to innovate. It will also help to strengthen it by providing an alternative to foreign payment providers, providing fast and efficient payment methods in Europe and other regions Strategic independence.”
The European Central Bank stated that several requirements must be met to create a digital euro. First, it must keep up with the pace of technological development, “the digital euro can be used throughout the euro area through standard interoperable front-end solutions and interoperable with private payment solutions. Second, it should match the distinctive characteristics of cash. It is easy for everyone to use, free of charge, and protects privacy. The digital euro must also be “at least as attractive as payment solutions provided by foreign currencies or through unregulated entities” and must be an improved monetary policy Transmission tool. It should also be widely used through flexible channels independent of other payment services, and can withstand extreme events such as the global pandemic.
The European Central Bank stated that the digital euro must also be used outside the euro zone. It must save costs and its design must also be environmentally friendly, which means it should be based on technology that minimizes its ecological footprint.
For the European Central Bank, the design of the digital euro must avoid being used as an investment tool, or even considered as a cryptocurrency or stable currency. It is mainly used as a payment method to avoid price fluctuations:
“In view of the risks of monetary policy transmission and financial stability, it is not advisable for the digital euro to attract large investment inflows. However, if the amount of digital euro held by individuals is too low, either due to strict restrictions, or due to relatively low thresholds. With the restraint measures imposed on it, the attractiveness of the digital euro as a payment method will be reduced, and its competitiveness compared with other tools will also be weakened.”
The report also discussed various technologies and organizational models for launching the digital euro. Although the report is comprehensive, the European Central Bank emphasizes that it hopes to discuss digital currencies with other stakeholders. It did not specify the specific method of distributing the digital euro.
On September 10, European Central Bank President Christine Lagarde said that the euro system has not yet decided whether to issue a digital euro. Although Lagarde has always supported the digital euro and emphasized that the digital euro will not replace legal tender.
