• Ameis Regulatory Services

On March 25, 2021, Fabio Panetta and Ulrich Bindseil of the European Central Bank (ECB) published a blog with the goal of dispelling misconceptions of a digital euro. First and foremost, Panetta and Bindseil affirm that the ECB remains at the stage of "exploring the possibility and considering it conceptually" as a matter of being prepared for an eventual decision.


In their blog, Panetta and Bindseil refute three persistent misunderstandings :

  • ECB intends to abolish cash and impose lower interest rates on a digital euro - False, a digital euro would be a "means of payment that would complement cash, not replace it". Cash is legal tender. Moreover, the possible choice of using a digital euro is "not about monetary policy" but rather convenience of payment. The ECB's intention is to examine an "alternative, modern and secure means of payment, backed by the commitment of an independent central bank", not one that is subject to the interests of a private company.

  • A digital euro would displace banking intermediation - False, the digital euro will not challenge the role of banks as it relates customer deposits. Panetta and Bindseil continue to state that greater focus of the digital euro discussion should be on stability risks. Given today's geopolitical context, the driving concern is "foreign tech giants potentially offering artificial currencies in the future".

  • A digital euro would not be based on a viable business model - False, building a digital euro will rely on extensive input from industry representatives, academics and the broader public to develop a viable model.

Different actors in the market have a multitude of concerns that range from design to implementation and social impacts of a digital euro. What is clear, is that the ECB has an important task to evaluate the diversity of perspectives and potential outcomes.


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