Digital Euro Named One of ECB’s Four Strategic Priorities

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In Brief
  • ECB Executive Board member Fabio Panetta has named the Digital Euro as one of the bank's four priority issues.

  • According to Panetta, the Digital Euro will be key to satisfying consumer demand and maintaining Europe's sovereignty.

  • He praised the proposed CBDC as a "simple, costless, risk-free and trusted" pan-Eurozone means of payment.

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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.

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’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.”

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David is a journalist, writer and broadcaster whose work has appeared on CNN, The Africa Report, The New Yorker Magazine and The Washington Post. His work as a satirist on 'The Other News,' Nigeria's answer to The Daily Show has featured in the New Yorker Magazine and in the Netflix documentary 'Larry Charles' Dangerous World of Comedy.' In 2018, he was nominated by the US State Department for the 2019 Edward Murrow program for journalists under the International Visitors Leadership Program (IVLP). He tweets at @DavidHundeyin

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