The digital euro
Issuing a retail central bank digital currency (CBDC) has emerged as a high priority for most of the central banks around the world. Through this new financial instrument, central banks would open access to their balance sheets to the broader public more than ever before. So far, several countries have fully launched a digital currency, a dozen are running their own small-scale trial rollouts and many more are in the process of exploring and developing such an instrument.
Alongside this global effort, in October 2021 the European Central Bank (ECB) launched a two-year investigation phase of the digital euro project. The aim is to address key issues related to its design and distribution. As it has been made clear by the ECB, a digital euro would not replace physical cash, but rather complement banknotes and coins as an electronic equivalent. It would be offered to the general public, e.g. individual users (subject to certain holding limits), business users and governments or other public authorities, for retail payments.
From a geopolitical and central bank perspective, issuing central bank digital euro (CBDE) is quickly becoming a matter of necessity. Nonetheless, the possible implications of a CBDC are so pervasive that its design and implementation require careful examination and planning. Equally, a thorough understanding of the potential consequences is of crucial importance.
CEPS, ECMI and ECRI are launching a Round Table on the Digital Euro, aiming to spark a wider discussion and a more in-depth analysis on the possible impacts of a digital euro. Beyond the topics of privacy and inclusion that are a concern for citizens and have been largely discussed, a greater understanding is required regarding the impacts it could have on financial stability, European sovereignty and strategic autonomy on payments, as well as on interoperability.
In this context, CEPS-ECMI-ECRI are proposing to launch a very focused Round Table with relevant stakeholders to discuss the current state of play regarding the digital euro project and to devise a limited series of key recommendations on how to move forward. The composition of the group should reflect the variety of interests involved in the digital euro project, which we think is missing in the current debate. It would be composed of market operators and infrastructures, central bank representatives and academics.
The Round Table will focus on three main topics:
• Identify the key areas that the ECB should prioritise.
• Discuss the possible short- and long-term implications for the banking sector and overall financial stability.
• Discuss the technical, operational, legal and supervisory aspects related to the interoperability of a CBDC system.
The Round Table would then put forward a list of policy recommendations and actions that can contribute to a more innovative, competitive and resilient European payments system.
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