Digitalisation is spreading to all areas of our lives, satisfying an increasing demand for immediacy in how we consume, work and interact with each other. In many ways, it is disrupting our cultural, social and economic fabric. The way we pay is no exception.
Our practices are changing – in some
countries rapidly so. Not long ago, cash was the only way to pay
instantly. It is still the dominant payment method for small amounts.
But the trend is towards cashless, contactless payments. We are
increasingly making purchases using tap-and-go cards, an app on our
phone or even a smartwatch.
As the guardians and issuers of their
currencies, central banks around the world are inevitably asking
themselves whether they should issue a digital currency. Should they
devise an electronic form of money which is also legal tender, which
commands the same degree of trust and which offers all the benefits of
money in its traditional form? In the euro area, should we issue a
digital euro alongside euro banknotes? We already have digital means of
payment, such as electronic transfers. And, of course, we have physical
central bank money in the form of cash. What we do not have is a digital
currency that is issued by the central bank and that we can all use in
daily life. In other words, we do not have a digital equivalent of euro
Whether or not we need a digital euro is a fundamental
and pressing question, and the ECB and the national central banks of the
euro area are considering it together. We are publishing a report today
on our assessment of the economic, strategic, technological and
societal choices that we face. It will form the basis of a public
consultation that we will launch on 12 October to hear the views of the
public and interested stakeholders.
The report concludes that we
should be ready to issue a digital euro if and when developments around
us make it necessary. This means that we already need to be preparing
for it. In the coming months, we will listen and experiment so that we
are in a position to take a fully informed decision on the possible
development and launch of a digital euro.
A digital euro would
aim to preserve the public good that the euro provides to citizens:
costless access to a simple, universally accepted, risk-free, trusted
means of payment. Issuing a digital euro may become necessary in a
variety of scenarios: think of situations where people no longer prefer
paying with cash, or extreme events – such as natural disasters or
pandemics – where other payment services no longer function. A digital
euro would also protect us from the potential for a public or private
digital means of payment, issued and controlled from outside the euro
area, to largely displace existing means of payment, which could raise
regulatory concerns and threaten financial stability or even our
monetary and financial sovereignty.
A digital euro would
complement cash, not replace it. Together, they would offer people
greater choice and easier access to means of payment. This would help
financial inclusion. A digital euro would also be a symbol of Europe’s
willingness to embrace change and lead from the front, supporting the
digitalisation of the European economy. It would promote innovation in
retail payments, synergising with the new payment solutions that
citizens and businesses need to prosper in innovative digital markets.
It would make the euro more attractive to people living outside the euro
area, thus increasing its global appeal and the strength of Europe’s
financial system. Finally, it would allow to more effectively combat
illegal activities, such as money laundering and the financing of
The introduction of a digital euro also poses
challenges. Some of these challenges are related to people’s individual
rights, such as the right to privacy. We will have to resolve these
issues when we develop functional and technological designs. Other
challenges are economic in nature. For example, some people fear that a
digital euro could hamper the activity of banks or generate instability
in times of financial stress. But a properly designed digital euro could
address these risks.
To face these challenges we must keep in
mind that the value of money – in both traditional and digital forms –
is rooted in citizens’ trust. Acceptance by the public is crucial. We
therefore want to listen to people and learn about their needs,
preferences and concerns with regard to a digital euro. The input we
receive both in the public consultation and in discussions with
Europeans’ elected representatives will guide our future work. We will
test concrete options through experiments, in cooperation with all
stakeholders. And we will liaise with the relevant institutions and
authorities as we assess the legal, economic and financial requirements
of a digital euro.
The euro has done well so far, providing a
currency that Europeans trust. We need to make sure that our currency is
fit for the future. Inaction is not an option.
This blog post
first appeared as an opinion piece in: Die Welt, Le Figaro, Corriere
della Sera, El Mundo, Financieele Dagblad, Kathimerini, Phileleftheros,
Le Soir, Die Presse and Politico.eu on 2 October 2020.
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