The President of the European Central Bank, Christine Lagarde, and executive board member Fabio Panetta penned critical objectives for the digital Euro in a blog. The duo said that the digital asset could only be a success if European users widely accepted it.
Apart from the adoption of the digital Euro, the document put forward some preliminary design considerations for its design. It noted,
“The digital Euro can only be successful if it becomes part of the everyday lives of Europeans. It must add value compared with existing solutions.”
Although it was too early to discuss the design of the stablecoin, the duo noted that the Central Bank expected to wrap up its investigation phase regarding the project in autumn of 2023.
The ECB has been actively looking into the role played by a digital currency in an economy since 2021. Following this enthusiasm, the central bank began an investigation phase into a CBDC in October 2021. The European Commission is responsible for proposing new legislation about the same and will introduce a digital euro bill by 2023.
Although the ECB has remained quiet about its findings and details of its experiments, it offered fringe news about the possibility of a euro launching in the coming years. It also provided insights on how the ECB planned to limit the digital Euro in circulation to 1.5 trillion euros [$1.5 trillion] to fight the adverse effects on financial stability.
The recent news of Euro parity with the dollar has shaken the market. The Euro fell to its lowest level in 20 years, which was also a verdict on the country’s fading economic prospects. While, on the one hand, a digital euro could bring technology to payments, it may also help boost this downside experienced within Europe’s economy.
As per Lagarde and Panetta, the digital Euro will be a means of payment and not a form of investment. The duo explained,
“Otherwise too many commercial bank deposits could be moved to the central bank – a scenario which would make it more difficult for banks to lend to consumers and companies, and which could even generate tensions in the banking system during times of financial stress.”
As a means of payment, the digital Euro needed to meet the needs of its users. As per the bank’s research, users value wide acceptance, ease of use, low costs, high speed, security, and consumer protection the most. It could be a success if the digital Euro can meet these demands and close a gap between those who have access to digital payments.
The blog noted,
“Introducing a digital euro would ensure that citizens can continue to trust in the monetary anchor behind their digital payments. It would protect the strategic autonomy of European payments and monetary sovereignty, providing a fall-back solution if geopolitical tensions intensify.”