Digital currency and physical cash will coexist according to the European Central Bank's perspective.
The European Central Bank (ECB) has announced its intention to introduce a digital euro, a virtual replica of the traditional currency, while affirming that cash remains important and widely used in the European economy. This move is aimed at striking a balance between the traditional and digital forms of money, offering Europeans a choice in payment methods that cater to their diverse needs.
The digital euro, designed to be easy and convenient for daily use, including online shopping and money transfers, is not intended to replace cash. Instead, it is meant to complement it, preserving the freedom, privacy, and accessibility that cash offers. Piero Cipollone, a member of the ECB's executive board, has highlighted the unique value that cash holds, stating that both the digital euro and physical cash will have full legal tender status.
The ECB's motivation to issue a digital euro includes reducing reliance on private, non-European payment providers and foreign stablecoins, which risk undermining monetary sovereignty and incur higher fees for merchants. The digital euro supports Europe’s strategic autonomy in payments.
The digital euro is designed to be a digital equivalent of cash, free to use, preserving privacy, and working even without internet network access. This mirrors cash’s offline usability and privacy features. The ECB is also modernizing banknotes to make them more secure, durable, and accessible to all, including those with visual impairments.
The first version of the digital euro could be available by 2026, with ongoing efforts to guarantee that physical euros are universally accepted across the eurozone law-wise. The ECB's aim is not to replace cash with the digital euro, but to offer both as choices, providing each individual with a payment method that suits their needs.
Cash remains essential for many transactions and to store value, and the ECB is committed to ensuring that it remains accessible, functional, and present for everyone across Europe. The digital euro, being backed by the European Central Bank, is official, safe, and trustworthy, offering Europeans another secure and convenient option for their daily transactions.
In summary, the ECB’s official stance is to maintain and protect cash’s role while innovating and introducing a state-backed digital euro that preserves the benefits and legal status of cash in a digital form, thereby allowing them to coexist harmoniously to meet Europeans’ diverse payment needs. The digital euro offers more options, helps protect data privacy, and supports Europe’s strategic autonomy in payments, all while ensuring the continued use and accessibility of cash.
[1] European Central Bank. (n.d.). Digital euro. Retrieved March 10, 2023, from https://www.ecb.europa.eu/paym/digital/html/index.en.html
[2] European Central Bank. (2021, November 11). Digital euro: What is it and why does it matter? Retrieved March 10, 2023, from https://www.ecb.europa.eu/pub/pdf/other/digital-euro-what-is-it-and-why-does-it-matter-202111.en.pdf
[3] European Central Bank. (2022, January 27). Digital euro: Progress to date and next steps. Retrieved March 10, 2023, from https://www.ecb.europa.eu/press/key/date/2022/html/ecb.mp220127_1.en.html
[4] European Central Bank. (2022, May 18). Digital euro: Answers to frequently asked questions. Retrieved March 10, 2023, from https://www.ecb.europa.eu/paym/digital/html/faq.en.html
The digital euro, a state-backed virtual currency, is designed to complement cash in the European economy, offering a secure, digital alternative for daily transactions. This technology-driven finance initiative is aimed at preserving Europe's strategic autonomy in payments and ensuring that both traditional and digital forms of money coexist, catering to diverse business needs.
