ECB says evaluation phase for digital euro to go well in 2021. According to an executive at the European Central Bank, the European Financial Authorities could draw up an investigation plan for the digital euro as early as next year.
Holger Neuhaus, head of market innovation and integration division at the ECB, joined the Singapore FinTech Festival 2020 on Dec. 7 to discuss the global development of central bank digital currencies, or CBDCs.
During the online discussion, Neuhaus claimed that the ECB expects European financial authorities to assess whether to launch a digital euro initiative by mid-2021 “In mid-2021, the Euro system will consider whether to launch a digital euro project. But just to highlight, it would be an investigation phase, not the decision yet to implement. It would basically allow us to come up […] with actually a plan, and what could be a digital euro, how could it look like, how could it be implemented, if and when a policy decision is taken.”
Neuhaus emphasised that the digital euro would supplement, not replace, cash or wholesale central bank deposits. He also noted that digital money from the central bank presents major challenges when it comes to CBDC’s use abroad, especially with regard to capital flow management and relative remuneration issues.
“That’s where it becomes difficult and that’s where we were left to think of how to limit it — with hard limits, whether with incentive schemes or whatever,” Neuhaus suggested.
Regarding CBDCs in Europe, Neuhaus noted the ECB’s public consultation on a potential digital euro. Released in mid-October 2020, the consultation intends to collect feedback from public and private stakeholders to evaluate whether Europe needs a digital euro.