The introduction of a digital euro “would support Europe’s drive towards continued innovation”, “strengthen the international role of the euro” and provide consumers with “free access to a simple, universally accepted, risk-free and trusted means of payment”, according to a new report published by the European Central Bank (ECB).
The 54-page Report on a digital euro has been prepared by the Eurosystem’s High-Level Task Force on Central Bank Digital Currency (CBDC).
It identifies the key reasons for introducing a digital euro within the existing Eurosystem, the core requirements and principles on which it would be based, the likely impact and implications of its introduction, and possible models for its back-end infrastructure and functional specifications.
The scenarios the task force foresees as requiring the issuance of a digital euro include “an increased demand for electronic payments in the euro area that would require a European risk-free digital means of payment, a significant decline in the use of cash as a means of payment in the euro area, the launch of global private means of payment that might raise regulatory concerns and pose risks for financial stability and consumer protection, and a broad take-up of CBDCs issued by foreign central banks”.
“Europeans are increasingly turning to digital in the ways they spend, save and invest,” says ECB president Christine Lagarde. “Our role is to secure trust in money. This means making sure the euro is fit for the digital age.
“We should be prepared to issue a digital euro, should the need arise.”
The publication of the report will be followed by a period of public consultation as well as by practical testing to determine the technical feasibility of different functional design models.