European Central Bank President Christine Lagarde and Governing Council Member Fabio Panetta wrote critical targets for the digital euro in a blog† The duo said the digital asset can only become a success if European users accept it widely.
Apart from the introduction of the digital euro, document put forward some preliminary design considerations for the design. It noted,
“The digital euro can only be successful if it becomes part of the everyday life of Europeans. It must add value compared to existing solutions.”
While it was too early to discuss the stablecoin’s design, the duo noted that the Central Bank expected to complete the research phase related to the project in the fall of 2023.
The ECB has been actively researching the role of a digital currency in an economy since 2021. In response to this enthusiasm, the central bank started a research phase into a CBDC in October 2021. The European Commission is responsible for proposing new legislation on the same and will introduce a digital euro account by 2023.
While the ECB has remained silent on its findings and details of its experiments, it provided marginal news about the possibility of the euro launching in the coming years. It also provided insight into how the ECB intended to Euro in circulation to 1.5 trillion euros [$1.5 trillion] to combat the adverse effects on financial stability.
The recent news from Euro parity with the dollar shocked the market. The euro fell to its lowest level in 20 years, which also reflected the country’s declining economic outlook. While on the one hand a digital euro could bring technology to paymentscan also help boost this downside of the European economy.
According to 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 that would make it more difficult for banks to lend to consumers and businesses, and could even create tensions in the banking system during times of financial stress.”
As a means of payment, the digital euro had to meet the needs of its users. According to the bank’s research, users value broad adoption, ease of use, low cost, 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,
“The introduction of a digital euro would ensure that citizens can continue to rely on the monetary anchor behind their digital payments. It would protect the strategic autonomy of European payments and monetary sovereignty and provide a fall-back solution if geopolitical tensions mount.”