ECB accelerates development of the digital euro
The decline in cash use in the Eurozone and the reliance on foreign electronic means are leading the European Central Bank to accelerate the creation of the digital euro
Transforming euro banknotes into digital format is not a new idea. However, there are currently compelling reasons that are leading the European Central Bank (ECB) to accelerate the process toward a solution that safeguards the region’s economic sovereignty.
Two of the most notable reasons for accelerating the process of creating the digital euro are, on the one hand, the decline in cash use, and on the other, the adoption of foreign electronic payment tools, such as Visa and MasterCard.
Towards a digital monetary union
Last July, Piero Cipollone, a member of the ECB’s Executive Board, stated: “The role of cash will be significantly reduced if we do not offer a digital equivalent (…). A digital form of cash would protect our sovereignty and ensure that our monetary union is also a digital monetary union.”
However, for the digital euro to become a reality, there are still aspects to be analyzed, such as the legal framework for this format, the degree of anonymity, the relationship with commercial banks, and the limitations that will prevent it from replacing bank money.
Protection of cash
Throughout this process, the Eurozone does not intend to eliminate cash. On the contrary, it seeks to protect it, as it is included as the second proposal — after the digital euro — in the Single Currency Package launched in 2023, which proposes “safeguarding the role of cash and its acceptance as an accessible means of payment for individuals and businesses in the Eurozone (the regulation on the legal tender of cash).”
Thus, “the mandatory acceptance of banknotes is foreseen, albeit with some exceptions, and the need for a well-distributed banking infrastructure to guarantee their availability throughout the Eurozone.”
The measures adopted by the EU and the ECB are aimed at safeguarding the region’s financial sovereignty and protecting citizens, as well as democratizing access to money.
M.Pino
With information from FinanzasDigital and CincoDías
(Main reference image source: Masood Aslami on Unsplash)
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