The president of the European Central Bank (ECB) has issued a statement declaring that it and the Eurosystem currently have no plans to issue a central bank digital currency (CBDC).
Cash Remains a Popular Means of Payment
Mario Draghi, president of the ECB, was responding to a mid-June letter from Jonás Fernández, a Spanish politician and member of the European Parliament.
Draghi issued his statement last week. In it, he said that the ECB had no plans to issue a central bank digital currency. Notably, though, it was “carefully analysing the potential consequences of issuing such a currency as a complement to cash.” He added that it was following the activities of and working with other central banks and the central bank community. He stated:
In principle, a central bank digital currency could meet demands for both the security and digitalisation of the economy. It could also allow monetary policy to reach a wider range of economic actors more directly.
However, there are several reasons why the ECB isn’t issuing a digital currency any time soon. Namely, the technology to issue one hasn’t been “thoroughly tested.” Additionally, euro banknotes remain a popular option, Draghi wrote. He then added:
Moreover, there is an increasing range of options for digital payments which allow noncash transactions to be completed almost as immediately as cash transactions.
Rising Interest in Crypto Market
Since the advent of Bitcoin and its following cohort of altcoins, there has been talk as to whether central banks will issue their own central bank digital currency.
Yet, while there has been much speculation, no bank has taken the leap of creating their own. It remains to be seen whether the ECB becomes the first. In the past, Draghi has issued warnings over Bitcoin and other cryptocurrencies. In February, he was reported as saying that digital currencies are “very risky assets.” As a result, they should be purchased with caution.
He went on to say that “their price is entirely speculative.”
Notably, last November, Draghi argued that digital currencies don’t pose a threat to the ECB. This despite the industry’s growing popularity. Fast-forward to February and Daniele Nouy, the ECB’s chief supervisor, said that regulating the digital currency market wasn’t a top priority.
For now, it seems that the ECB is happy to continue sitting on the fence. Whether it plans to take decisive steps to issue a central bank digital currency is not known. However, the fact that it’s being discussed at all indicates some potential.
Do you think the ECB will issue its own crypto coin? Let us know in the comments below.
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