Because the ECB is pushing for the digital euro
Reasons, opportunities and challenges of a digital euro according to Fabio Panetta, member of the executive committee of the ECB and president of the task force that has drawn up an in-depth report on the possible issue of a digital euro
The European Central Bank today published a report on the possible issuance of a digital euro, drawn up by the Eurosystem's high-level task force on bank digital money and approved by the Governing Council.
With a digital euro – it is explained in a press release – a central bank money would be introduced in electronic form to which all citizens and businesses would have access to make daily payments quickly, easily and securely, as with banknotes but in form digital.
The digital euro would join cash, without replacing it and in any case the Eurosystem will continue to issue cash. 'The euro belongs to European citizens and our mission is to be its custodians – said ECB President Christine Lagarde – European citizens are increasingly resorting to digital technology in their spending, saving and investment behavior. Our role is to maintain confidence in the currency, while also ensuring that the euro is ready for the digital age. We should be prepared to issue a digital euro should it be needed. '
The Eurosystem task force, made up of experts from the ECB and the 19 national central banks of the euro area, has identified the possible scenarios in which the issuance of a digital euro would be necessary. These scenarios assume an increase in the demand for electronic payments in the euro area which would require the adoption of a European risk-free digital payment means; a significant decline in the use of cash as a means of payment in the euro area; the introduction of private means of payment of global reach that could generate regulatory problems as well as pose risks to financial stability and consumer protection; wide diffusion of digital currencies issued by foreign central banks.
The Governing Council – specifies the ECB statement – has not yet taken a decision on the possible introduction of a digital euro. The Eurosystem will engage extensively with citizens, academia, the financial sector and public authorities to assess their needs and consider in detail the benefits and challenges they expect from issuing a digital single currency. A public consultation will be launched on 12 October next. The experimentation phase will start in parallel, without prejudice to the final decision.
“The introduction of a digital euro would support Europe's drive towards continuous innovation, also contributing to its financial sovereignty and strengthening the international role of the euro”. This was written by Fabio Panetta, member of the Executive Committee of the European Central Bank and chairman of the task force who prepared an in-depth report on the possible issue of a digital euro, underlining how "technology and innovation are changing the way we consume, work and we interact with others ".
“A single digital currency would preserve the public good that the euro constitutes for citizens, namely free access to a simple, universally accepted, risk-free and reliable means of payment. This also poses challenges, which the Eurosystem can address by adopting appropriate strategies in the design of the digital euro, ”he added.
As issuers of the currency, "the major central banks are considering the opportunity to issue a digital currency, that is, an electronic currency that is legal tender and able to inspire the same degree of trust as traditional forms of money, offering the same benefits. The European Central Bank (ECB) is also considering whether to combine a digital currency with traditional paper forms of euro cash ”.
“Today we have digital means of payment, such as online wire transfers, as well as currency in the form of banknotes, but we do not have a digital currency issued by the central bank and usable for our daily payments. In other words, we do not have banknotes in digital form ", added Panetta:" The opportunity to issue a digital euro is a relevant and urgent issue for the ECB, which we are analyzing with the national central banks of the euro area. ".
Today – Panetta points out – we published a report on the ECB website in which we evaluate the economic, strategic, technological and social implications of the possible issue of a digital euro. The report will be subject to public consultation starting from 12 October, in order to collect the opinions of European citizens and any other interested party ".
“According to our assessments – added Panetta – the ECB should be in a position to issue a digital euro if this becomes necessary, and should start preparing for this eventuality right now. In the coming months we will therefore start the experimentation activities, with the aim of being able to make, when appropriate, the most appropriate choice regarding the design and issue of a digital euro. This new form of central bank money will have to offer citizens the same services that the euro offers them today, that is, free access to an easy-to-use, universally accepted, reliable and risk-free means of payment. "
According to the report, the issuance of a digital euro would be necessary in different scenarios, wrote Panetta: “For example, if citizens become reluctant to use cash; or if extreme events – such as natural disasters or pandemics – render other means of payment useless. A digital euro would make it possible to face the danger that digital payment instruments issued by entities outside the euro area could replace the current means of payment, raising regulatory problems and risks for financial stability and for economic, monetary and monetary sovereignty. financial institution of Europe ".
“The digital euro would complement cash, without replacing it; it would allow citizens a wider choice and easy access to means of payment, promoting financial inclusion. It would represent the symbol of Europe's desire to take a leading role in the digitalisation and modernization of the economy, stimulating innovation in the field of payments and promoting the dissemination of the tools necessary for citizens and businesses to thrive in digitalised markets ”.
The digital euro – according to Panetta – “would make our currency more attractive abroad, increasing its role as a global currency and strengthening the European financial system. It would give effectiveness to the fight against illegal activities such as money laundering and terrorist financing ”.
The issuance of a digital euro also poses challenges, added the member of the Executive Committee of the European Central Bank: “Some of them concern people's rights, such as the right to privacy. Others are economic in nature. For example, according to some, a digital euro could hinder the activity of banks or induce instability in the presence of financial tensions. The possible risks will have to be taken into consideration and faced through an appropriate definition of the characteristics of the digital currency ".
Panetta concludes: “In facing these challenges, it must be borne in mind that the value of money, both paper and digital, is based on the trust of citizens. It is crucial that they accept it. This is the reason that pushes us to listen to them, to evaluate their fears, needs, preferences. The stimuli that will emerge from the public consultation and from the discussion with the representatives of European citizens will guide our activity. We will review the available options together with stakeholders; we will collaborate with the institutions and the competent authorities in order to assess the legal, economic and financial requirements linked to the introduction of a digital euro. The euro has so far achieved its objectives, and it represents a currency that European citizens trust. In the future we will continue to do what is necessary so that it remains up to the challenges posed by progress, in the awareness that we cannot remain inert ”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/perche-la-bce-spinge-per-un-euro-digitale/ on Fri, 02 Oct 2020 06:52:41 +0000.