European Central Bank (ECB) executive board member Fabio Panetta has praised the proposed Digital Euro as “A simple, costless, risk-free, and trusted digital means of payment” that would be universally accepted across the Eurozone. Speaking in Frankfurt on Oct 22, Panetta named the Digital Euro as one of four key strategies that the ECB will adopt going forward.
These strategies, which he said are in response to the changing payments landscape in Europe include continued provision of cash, further developing the pan-European retail payments infrastructure, uniform oversight for electronic payments technology, and the Digital Euro.
(THREAD) Central banks are adapting their policies to ensure that payments remain efficient and inclusive, says Executive Board member Fabio Panetta. Authorities must be ready to respond to the ongoing transformation of European payments https://t.co/CBcQujXwyY 1/6 pic.twitter.com/s9FE7ETyrt— European Central Bank (@ecb) October 22, 2020
ECB Moving Toward CBDC Adoption
Panetta made the comments while delivering a keynote speech at the ECB conference titled “A New Horizon for Pan-European Payments and Digital Euro.”
Giving insights into Europe’s ongoing digital payments transition, Panetta revealed that cash transactions have declined from 54 percent of total transaction value in 2016 to 48 percent in 2019.
He also revealed that over the same period, cashless transactions have jumped from 19 percent to 24 percent in volume, and from 39 percent to 41 percent in value. These shifts he said, are part of a growing body of evidence that suggests that Europe needs a new payment strategy for the future that is costless and risk-free to consumers.
In his view, the growing importance of cashless transactions, driven by card payments as a result of the COVID-19 pandemic highlights the need for card payment schemes that seamlessly interoperate across borders. Against this backdrop, Panetta believes that the Digital Euro, a proposed Central Bank Digital Currency (CBDC) to be issued by the ECB will play a key role.
Panetta: A digital euro would make digital central bank money accessible to everyone. It would provide access to a simple, costless, risk-free and trusted digital means of payment that is accepted throughout the euro area. More about a digital euro https://t.co/RiwOCers68 6/6— European Central Bank (@ecb) October 22, 2020
Panetta’s comments mirror thoughts expressed recently by a number of senior ECB executives.
BeInCrypto reported in September that ECB President Christine Lagarde described the Digital Euro as a potential complement to cash. Speaking to the Franco-German Assembly, Lagarde suggested that the CBDC could facilitate the emergence of a European ‘Digital Single Market.’
Panetta’s Word Of Caution
Panetta was keen to point out that the journey toward Digital Euro issuance is by no means complete yet. He pointed out that while it would offer several advantages, it could also pose challenges involving cybersecurity and unintended consequences on monetary policy, banks, and Eurozone financial stability.
Outlining the steps that the ECB is taking to mitigate the potential risks, Panetta said:
“As the issuer of our currency, the Eurosystem is carefully examining the economic, technological, societal and strategic implications of the possible issuance of a digital euro. We have recently published our Report on a digital euro, and started a public consultation. We will carefully examine the feedback we receive, so that if and when developments around us make it necessary, we will be ready to issue a digital euro that meets the needs of Europeans.”