08 March 2023

Speech by Commissioner McGuinness at the European Parliamentary Financial Services Forum on a digital euro

Because we're now beginning to understand what a digital currency is, what a digital euro might mean...But we need it to translate and we need it transmitted beyond a technical exercise.

Thank you Othmar [Karas], dear Vice-President of the European Parliament, and dear Stéphanie [Yon-Courtin], for raising this really important topic on International Women's Day, and making this location where I do see a mixed audience.

Not always happening in the financial services area, I think an important point to make on this day that we mark International Women's Day.

So, I think Stéphanie you have made a great case for more discussion, more debate and more communication, as Othmar did.

And I just want to compliment the European Parliamentary Financial Services Forum, because you are really right on the button with this topic on this day.

Because we're now beginning to understand what a digital currency is, what a digital euro might mean.

But we need it to translate and we need it transmitted beyond a technical exercise.

So thank you for organising today.

As you said, the ECB are well into the investigation on this project, and a lot of technical work.

We in the Commission will publish a legislative proposal this year setting out the principles behind a digital euro.

Of course the decision is one for the ECB, and clearly we are working together on the investigation and going through all of the details.

But I think as you've heard from Stéphanie, even I got more information, so it's really good to listen to the voices.

You've heard from colleagues how complex this topic is, and how there is a need to understand the difference between a digital payment on my phone and a digital euro.

And frankly I don't think we have simplified that explanation sufficiently.

But we have time to do that.

What's really, really important as a former Member of the European Parliament, is that you as members of parliament and leading members of parliament, have a particular role and responsibility to talk and listen to your citizens about their views on cash and the digital euro.

And I really want to complement the comments made around – this is not about replacing cash.

And in the Commission, every time I speak on this, I say this is to complement cash – taking account of what's happening in the real world around digitalisation.

So I think that the role of members of parliament is really key, and I know you will carry that responsibility and engage with citizens.

But maybe before we go digital, let's talk about money.

I actually don't have a pocket, so I've no money in my pocket, but actually I've none in my wallet either, and I think that's interesting. I did have some but I used it for good purposes.

But if we look at money itself, what it actually is, and how it's changing, I think that might help us then come to terms with what a digital euro is.

And I remember learning in business organisation all those decades ago that money is a means of payment: so you exchange it for goods and services.

It is a unit of account: so it allows a price to be set for goods and services.

And it is a store of value: so you can save it.

So when you think of those three principles, it is really what money's all about.

And we're long used to handling physical cash – although I tend to think that a younger generation are less accustomed to handling physical cash, they've different relationships with the financial system, and indeed with cash that perhaps their parents have. I have four to do some test marketing on so I listen very carefully.

Because as you know it is central banks that of course issue coins and banknotes.

They also, central banks, have a key role in regulating monetary systems, taking policy decisions to influence the cost and availability of money in an economy.

Central bank money acts as a ‘monetary anchor'.

And for me, I think this is the most important sentence: it is the safest form of money. Although we don't encourage people to keep large amounts of it in their homes because we know that that can also lead to some terrible societal and terrible crimes.

But if you look at what cash and coins are, it's the only money whose face value is guaranteed.

When you deposit money in a commercial bank, it becomes a liability of that bank.

By contrast, a coin or banknote is a direct liability on a central bank and because it is central bank money, it is free from credit and liquidity risk.

When we use private money, our confidence in it is based on the fact you can convert it back to central bank money.

So it's clear that central bank money plays an important role in our system....

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