The Governing Council of the European Central Bank decided, on Wednesday 14 July, to formally launch a two-year pilot project to prepare for the possible issue, three years after, of a digital euro in 2026 (see EUROPE 12581/21).
“In practical terms, this means that we will commit the resources necessary to develop a marketable product. But the decision on whether or not to issue a digital euro will only be taken at a later stage”, said Fabio Panetta, member of the ECB’s Executive Board.
He listed the benefits of a digital euro, which would “complement cash, not replace it”, reduce transaction costs, increased financial inclusion, enhance security and protection of privacy.
“Just like cash, a digital euro would be a direct claim on the central bank and would therefore have no risk – no liquidity risk, no credit risk, no market risk”, Mr Panetta said.
He also stressed the importance that all technical options considered ensure that the digital euro remains “a means of payment and not of investment” in order to avoid a flight of deposits into the banking sector, which could ultimately pose financial stability problems (see EUROPE 12750/26).
The German and French finance ministries welcomed the announcement. The digital euro will be “essential in preserving our digital and monetary sovereignty”, it “represents a relevant alternative to the development of private crypto-assets as means of payment, or to the development of foreign central bank digital currencies” and it could also “support the international role of the euro”, they say in a joint statement. It also requires that the States be closely involved in the project.
More information on the ECB pilot project: https://bit.ly/2Ta09Xf (Original version in French by Mathieu Bion)