The Limited Times

Now you can see non-English news...

Europe could have a digital euro by the middle of this decade

2021-07-15T01:45:21.109Z


The European Central Bank is exploring the possibility of issuing a digital version of the euro as the use of cash declines.


Digital dollars in the United States: this is how they would work 1:03

London (CNN Business) -

The European Central Bank is advancing its efforts to create a digital version of the euro as the use of cash declines and China accelerates testing of its own e-yuan.

The central bank announced on Wednesday a two-year investigation that will examine "key questions regarding the design and distribution" of a digital euro and analyze the possible impact on the market.

The final decision on the deployment of a digital euro would come later.

"Given the ongoing digital transformation, which has the potential to transform the payments landscape and even the entire financial system, central banks must be bold and keep pace with change," said Fabio Panetta, member of the Bank's Executive Committee. Central European Union (ECB), in a blog post.

  • China wants to launch its own digital currency

A digital euro would not replace cash, but it would work in much the same way.

Instead of paying for goods or services with banknotes, Europeans could use an electronic form of money issued by the European Central Bank or national central banks to a digital wallet.

Panetta said the central bank will try to start developing a digital euro once the investigation period is over.

This subsequent process "could take about three years", which would put Europe on the path of the possible launch of a digital currency in 2026.

Why Europe takes action

The European Central Bank acknowledges that "there are still many questions to be answered" before introducing a digital euro.

But the central bank believes it is worth exploring to "ensure that in the digital age citizens and businesses continue to have access to the safest form of money, central bank money," President Christine Lagarde said in a statement.

advertising

It is also clear that the European Central Bank is concerned about the consequences of waiting too long to act.

In a speech last month, François Villeroy de Galhau, the governor of France's central bank, said that central bank money could be relegated to the background as the use of cash declines and new digital coins and tokens emerge.

Europe began studying a digital euro more seriously after Facebook unveiled its plans to create a digital currency in 2019.

Facebook Launches Its First Digital Currency: Will It Work?

4:31

Villeroy also highlighted China's progress in launching a digital yuan, which is already available in several cities in that country.

"The risk is clearly that Europe will lose momentum not only in its efforts to strengthen the international role of the euro, but even to preserve it," he said.

"The challenge here is also a geopolitical concern."

But some experts doubt that a digital euro is necessary, considering the number of consumers who already carry out transactions with credit or debit cards or with mobile payment services.

"I'm a bit skeptical that people really need it," said Grégory Claeys, a member of the Bruegel think tank based in Brussels.

Could there be a digital dollar?

Officials at the US Federal Reserve are also debating the possibility of creating a digital dollar, although they move more cautiously than their European counterparts.

Digital dollars in the United States: this is how they would work 1:03

Randal Quarles, vice president of supervision at the Federal Reserve, said last month that any proposal to create a central bank digital currency, or CBDC, must overcome a "high bar."

"Before we get carried away by the novelty, I think we need to subject the promises of a CBDC to careful critical scrutiny," he said.


The official noted that the US dollar "is already highly digitized" and rejected the idea that the United States has to act simply because other jurisdictions have gone ahead.

"It seems unlikely ... that the dollar's status as a world reserve currency, or the dollar's role as the dominant currency in international financial transactions, will be threatened by the creation of a foreign CBDC," Quarles said.

digital currency

Source: cnnespanol

All news articles on 2021-07-15

You may like

News/Politics 2024-02-07T16:23:44.526Z

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.