Fabio Panetta – member of the executive board of the European Central Bank – has revealed that the digital version of the euro could become legal tender within the European zone.
Digital Euro ‘Should Not Be Taken for Granted’
As Bloomberg reported, the Italian economist and member at the ECB – Fabio Panetta – hinted about the initiative during a panel discussion in Helsinki, Finland. He said that if the European Central Bank continues its efforts to launch a digital currency, the new form of currency will have every chance of being legal tender within the borders of the EU.
Panetta added that the authorities will thoroughly examine the endeavor in the next two years. Nevertheless, the Italian felt that the realization of such a decision “should not be taken for granted” and that the financial institution should be very careful.
Last week, he opposed the argument that the digital euro will be “redundant” amid other alternative currencies as the ECB will aim to make its CBDC cost-effective and guarantee its usability. The latter is vital as it could enable wider adoption among the general population. The Italian economist added that the central bank’s digital currency will be “attractive enough” to capture the attention of society.
During the event, Elvira Nabiullina – the head of the Bank of Russia – agreed with Panetta about how a central bank digital currency should look like.
A few months ago, she believed that the CBDCs, working under government control, will represent the future of the financial network. On the other hand, she is a fierce critic of private digital assets, which in her opinion, are highly volatile, and investors could lose “colossal sums” if they deal with them.
The digital euro could be greener than bitcoin
Earlier this year, the European Central Bank underlined its intention to launch an investigation phase into a digital euro project that will run for 24 months. Within the testing period, the ECB’s research department will “aim to address key issues regarding design and distribution” as the digital version of the euro “must be able to meet the needs of Europeans.”
In addition, the CBDC should “prevent illicit activities and avoid any unwanted impact on financial stability and monetary policy”. Christine Lagarde – President of the European Central Bank – said the financial product should be “the safest form of money.”
Finally, the ECB promised that the energy consumption of the digital euro would be “negligible” compared to that of bitcoin. It is worth mentioning, though, that central bank digital currencies and the primary cryptocurrency are significantly different assets.
A CBDC is a digital version of a country’s fiat currency over which the Central Bank still has full control. It lacks any sort of decentralization as there is a single authority that’s shaping the monetary policy and regulation.
Bitcoin, on the other hand, is quite the opposite, which is why many believe that the emergence of a CBDC could push people even more towards BTC.
