Conversation with Der Spiegel

Fabio Panetta, a member of the Executive Board of the European Central Bank (ECB), recently conducted an interview discussing the potential introduction of a digital euro. The move towards digital payments has been accelerated by the COVID-19 pandemic, with more people preferring to pay digitally rather than with cash. The digital euro would serve as an efficient and universally accepted means of payment, providing an alternative to other digital payment methods. While the details have not been finalized, the digital euro would be a claim on the central bank, similar to cash, and would be distributed through banks. The ECB aims to work in partnership with commercial banks rather than competing with them. Concerns about data protection and avoiding excessive fees charged by dominant providers were key factors in the decision to explore the digital euro. The ECB also wants to ensure that it remains at the forefront of digital payment developments, particularly in light of initiatives such as Facebook’s Libra and China’s digital yuan. The ECB’s main motivation is to provide a European option and prevent a small group of companies from dominating the market. The introduction of the digital euro would not destabilize the financial system or commercial banks. If people choose to convert cash into digital euros, banks would not lose deposits, and the ECB could provide additional liquidity if needed. The ECB plans to present its preliminary analysis in the summer and make a decision on whether to proceed with the digital euro. The process of determining the operational scope and technical solution would take at least 18 months, with a potential implementation timeline of four to five years. The ECB is also considering a trial period to test the digital euro in different cities.

Read more