The ECB has weighed in favor of incorporating a digital euro. The vision’s details were shared by Fabio Panetta, a member of the executive board of the European Central Bank (ECB). The central bank discussed the possibility of a European CBDC for retail payments at the beginning of the year and was put into a 24 month “investigate phase” past July.
Central banks want sovereign money to become more accessible and flexible in this new era.
ECB executive Panetta started by pointing out that the digitalization of the economy is transforming our lives, needs, “how we pay, and the payment landscape.” For this reason, many central banks want sovereign money to become more accessible and flexible in this new era. In the past, private banks have called CBDCs redundant “given the vast supply of private digital monies available,” but Panetta argues that central banks face the need to “evolve alongside changing technologies, payment habits and financial ecosystems” and portrayed the role of central bank money as a monetary anchor.
Cash has lost popularity in Europe during the pandemic.
Panetta claims central bank money is “the safest form of money in the economy” and “the only money whose face value is intrinsically guaranteed” and said that convertibility is the ultimate reason users trust and use private intermediaries.
“Central bank money plays a key role in maintaining a well-functioning payment system and financial stability and ultimately trust in the currency by providing a monetary anchor. This, in turn, is apreconditionn for preserving the transmission of monetary policy, and hence for protecting the value of money,” the ECB executive said.
Cash has lost popularity in European countries during the pandemic. Nowadays, approximately half of all European consumers rather use means of payment that do not involve cash.