The European Central Bank (ECB) has stated this year that it may seek to develop a “digital euro” currency and make it accessible to all citizens and companies, creating many benefits and risks.
The possible emergence of a “virtual euro” comes as the COVID-19 pandemic has pushed many consumers away from handling paper cash, while private cryptocurrencies like Bitcoin have become more prominent. In addition, Facebook’s (FB) plan to launch its own “Libra” digital currency also raised stakes for global central banks.
The ECB said this new form of currency would enable fast, easy and secure payments but would only complement the use of cash, not replace it.
The issuance and transference of digital euros would likely be done using the technology known as blockchain, which supports Bitcoin.
Other central banks, including Sweden’s Riksbank, the Swiss National Bank and the People’s Bank of China, have seriously considered forming their own digital currencies and moved ahead on these projects.
“Europeans are increasingly turning to digital in the ways they spend, save and invest,” said ECB President Christine Lagarde. “Our role is to secure trust in money. This means making sure the euro is fit for the digital age. We should be prepared to issue a digital euro, should the need arise.”
Fabio Panetta, a member of the ECB’s executive board, said a digital euro would “strengthen the international role of the euro.”