European Central Bank digital euro report: ‘We should be prepared to issue’

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The European Central Bank has published a new report on the digital euro, arguing that it must be prepared to issue a digital currency when the need for it arises.

The comprehensive document sets out the central bank’s latest thinking around the digital euro, and suggests that the bank would be open to considering both centralized and decentralized models for the digital currency.

The report was put together by the Eurosystem High-Level Task Force on central bank digital currency (CBDC), and subsequently approved by the Governing Council. In it, the ECB says a digital euro would be used as a complement to, rather than a replacement for, cash.

The bank said a decision had yet to be made on whether a digital currency was needed, but that it “should be prepared to issue…should the need arise.”

Chair of the ECB’s CBDC task force, Fabio Panetta, said the ECB was working with national central banks to consider the issues around a central bank currency.

“Whether or not we need a digital euro is a fundamental and pressing question, and the ECB and the national central banks of the euro area are considering it together.”

In the report, the ECB suggested it was confident in meeting the challenges posed by developing a CBDC.

“A digital euro would preserve the public good that the euro provides to citizens: free access to a simple, universally accepted, risk-free and trusted means of payment. It also poses challenges, but by following appropriate strategies in the design of the digital euro the Eurosystem can address these.”

A public consultation process is scheduled to begin on October 12, with the ECB noting “experimentation will start in parallel, without prejudice to the final decision.”

The news comes at a time when central banks worldwide are engaged in researching and developing central bank digital currencies.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.