Europe’s financial regulators will explore the possibilities of a digital euro next year. The digital euro will complement, not replace, the fiat currency.
Holger Neuhaus, Head of Market Innovation and Integration at the European Central Bank (ECB), took part in the Singapore FinTech Festival 2020 on December 7 to discuss the global development of state-owned cryptocurrencies. During an online discussion, Neuhaus said that European financial regulators could decide whether to launch the digital euro initiative by mid-2021.:
“In mid-2021, EU regulators will consider launching a digital euro project. I want to emphasize that this will be a stage of study, not a release, which has yet to be implemented. In essence, this would allow us […] to develop a plan for what the digital euro could be, what it could look like, how it could be implemented, if and when this decision is made.”
Neuhaus stressed that the digital euro will complement, not replace, cash or Central Bank deposits. He also noted that the Central Bank’s digital money creates big problems when it comes to using the state-owned cryptocurrency abroad. Especially in relation to the management of capital flows and the issue of relative remuneration.
“Here we are facing difficulties and we need to understand how to deal with them – with the help of strict restrictions, whether it is incentive schemes, or something else,” Neuhaus suggested.
As for the launch of a state-owned cryptocurrency in Europe, Neuhaus noted the ECB’s public consultation on the possible launch of a digital euro. In early November, the ECB launched
a survey that invites EU citizens to express their position on the issue of the digital euro.
Last month, ECB President Christine Lagarde said she believed the EU’s monetary regulators could issue a digital euro in the next two to four years.