Christine Lagarde, the managing director of the European Central Bank (ECB), sets the deadline for the implementation of the digital euro, an electronic form of central bank money that exists alongside cash, at a maximum of 5 years.
In practice, the digital euro will be “like banknotes but in digital form” for “make daily payments fast, easy and secure“, continued the old directive of the International Monetary Fund (IMF).
These words, reported by Reuters, were spoken on the occasion of the delivery of the results of a public consultation on the creation of a digital euro launched a year ago. Via an online questionnaire, individuals and professionals alike could submit their proposals on the functionalities of this future device, the obstacles to its implementation and the model that they believe to be the most attractive (with or without an intermediary, for example).
In total, the consultation received responses from 8,221 participants. A “record” among the public consultations launched to date by the institution, rejoices the ECB.
Increased demand for confidentiality of payments
The confidentiality of payments occupies “the first place among the characteristics requested of a digital euro (41% of responses), followed by security (17%) and pan-European scope (10%)”, we can read in the communicated.
A more complete analysis of this consultation will be published in spring 2021. It will constitute “an important contribution” to the Governing Council of the ECB, the main decision-making body, when it decides to launch the digital euro project.
A decrease in the use of cash
The Eurosystem working group, bringing together experts from the ECB and 19 national central banks in the euro area, has already identified several possible scenarios that would require the issuance of a digital euro, such as increased demand for electricity payments in the euro zone, a significant drop in the use of cash as a means of payment, etc.
Experts also cite “the launch of global private means of payment”, such as the Facebook-led cryptocurrency Libra, which raise “regulatory concerns” and “risks to financial stability and consumer protection.”
The Banque de France is also considering launching a central bank digital currency (MDBC) soon. This cryptocurrency should improve the efficiency of the financial system by streamlining transactions.