The European Central Bank (ECB) has launched a public consultation on a digital version of the euro while also experimenting with it. A digital euro would not replace cash but complement it.
October 2, 2020 | AtoZ Markets – According to the Bloomberg report, the European Central Bank will start experimenting with a digital version of the euro while holding a public consultation, which is a major step toward introducing the technology.
“Our role is to secure trust in money,” President Christine Lagarde said as the ECB published a study into the benefits and drawbacks of digital currency. “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,” Christine added.
ECB public consultation on a digital euro starts on October 12, 2020
According to the ECB, the consultation will start Oct. 12, and the experiment will be held in parallel. The ECB said it would decide toward mid-2021 whether to launch a digital euro project, which would start with an “investigation phase.”
Cryptocurrencies, while regularly criticized by central bankers as little more than speculative assets, have nevertheless spurred a close look at how payment technologies are developing. A CBDC would allow euro-area residents to place deposits with the ECB directly. That’s typically only an option for commercial lenders, governments, and other central banks.
A digital euro would not replace cash, but complement it
Recently, the ECB president spoke at a conference before the Franco-German Parliamentary Assembly about the introduction of the digital euro. Lagarde said she expects the digital euro to be an asset that would not replace fiat money, but rather serve as a supplement.
“We are also exploring the benefits, risks and operational challenges of introducing a digital euro,” Lagarde said, in her speech, adding, “A digital euro could be a complement to, not a substitute for, cash. It could provide an alternative to private digital currencies and ensure that sovereign money remains at the core of European payment systems.”
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