The European Central Bank (ECB) has been talking a big game about its forthcoming digital euro, particularly considering its functionality.
However, the agency remains resolute in its stance that it shouldn’t rush an asset and instead move with caution.
Synergy is Required for Optimal CBDC Performance
Earlier this week, several experts from the ECB agreed that a cautious approach would be the best way forward considering the digital euro.
In a panel tagged “Upgrading Money to the Digital Age: Introducing Digital Euro,” participants argued that the primary goal would be to form a consensus on the digital euro and the form it should take.
In the panel, Austėja Šostakaitė, a Market Infrastructure Expert at the ECB and a former Senior Economist at the Bank of Lithuania, explained that the ECB would not be considering a digital euro until the middle of 2011. She wants the ECB to focus on solving the most critical questions on introducing the asset into the European financial ecosystem and how to collaborate it with commercial bank money.
Carl Andreas Claussen, an advisor to the Swedish Riksbank, also explained that the Riksbank is currently working on a proof-of-concept for the e-krona. However, he highlighted that a launch for the asset is “four to five years away.” Claussen highlighted,
“There are some legal questions and this is such a big issue that we cannot decide on this. We need some political backing. We suggested to the parliament that they should have an expert committee looking at this.”
Top ECB Brass in On Board
All opinions appear to be in line with the official stance of the ECB. While it first announced its digital euro in September, the agency has made it clear that it wouldn’t be rushing development for the asset. In an online panel from November 12, Christine Lagarde, the agency’s President, explained that it had chosen to focus on the proper implementation.
Lagarde pointed out that the ECB had set a consultation panel to explore the potential of a CBDC. She added that the panel would give a consultation report by January 2021. This report will help the bank make decisions on whether to launch – and what course to follow. While Lagarde highlighted that she believed a digital euro would come to light, she also understood that everyone needed to agree on the right implementation format.
The President has been an ardent supporter of Central Bank Digital Currencies (CBDCs) for a while. Earlier this week, she explained in an article that the digital euro would help bring the Eurozone into the digital financial age.
Lagarde added that the digital euro could complement cash and ensure seamless access to central bank money. It would surely ensure the maintenance of monetary sovereignty – especially in a future where the use of physical cash declines.
Reuters also reported last week that Olaf Scholz, the German Finance Minister, had called on the ECB to expedite the asset’s development. Scholz, an ardent critic of private cryptocurrencies, explained that there is already significant demand for digital payments across the European Union. As he believes, it is time for the ECB to move swiftly towards developing its CBDC.