ECB Board Member: Digital Euro Would Not Be Redundant

European Central Bank executive board member Fabio Panetta promised that the digital euro will be appealing to users and won’t be overwhelmed by other private payment types, according to a Bloomberg report on Friday (Nov. 5).

ECB is working with the European Commission on “a broad range of policy, legal and design questions” related to the digital euro, including what would happen if the currency is made legal tender across the continent, where euro coins and banknotes can be used to pay for goods and services in the region.

The digital euro will be deemed successful if it’s widely available and cheap enough for consumers and merchants to want to use it, said Panetta in the Bloomberg report. He doesn’t see central bank digital currencies (CBDCs) such as the digital euro as redundant to credit cards, apps, stablecoins or other private payment options.

“Central bank money provides the reference value for all other forms of money in the economy,” Panetta said. “History shows that financial stability and public trust in money require a widely used public money alongside private monies.”

The ECB hasn’t decided whether it will launch a digital euro, but could target 2025 for its debut if it’s approved. Panetta isn’t taking the success of the digital euro and other CDBC for granted.

“Users may lack sufficient incentives to fully appreciate the public benefit created by the availability of a CBDC and — given the vast supply of private digital monies — could express insufficient demand for it,” he said in the Bloomberg report.

Related news: Crypto Is Innovative But Risky, European Regulator Says

In September, the European Securities and Markets Authority (ESMA)’s “Trends, Risks and Vulnerabilities” report called cryptocurrency both a financial innovation and a possible threat due to the cost of crypto mining.

Crypto asset volatility and the growing popularity of stablecoins, CBDCs and decentralized finance (DeFi) are leading to increased risk across all digital assets.

Meanwhile, the ECB is in the middle of what it expects will be a two-year investigation into the viability of a digital euro.