“The euro belongs to Europeans and our mission
is to be its guardian,” said Christine Lagarde, ECB
President. “Europeans are increasingly turning to
digital in the ways they spend, save and invest.
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.”
A digital euro would be different from current
cashless payment systems run by the private
sector because it would be official central
bank money - trustable, risk-free and likely
less expensive to use. A central bank digital
currency could also be used offline, for instance,
to transfer small amounts between individuals
using digital wallets on their smartphones and a
Bluetooth connection.
The use of cash is dwindling in some countries,
led by Sweden, where most bank branches no
longer handle cash and shops, restaurants and
museums accept only cards or mobile payments.
Additionally, the pandemic has led to an
increase in touchless, non-cash ways of paying
in shops. Cash still has its adherents because it
is convenient and private, and the ECB was at
pains to make clear it was not proposing doing
away with notes and coins.
The ECB is not alone in studying the issue.
China’s central bank is already testing an official
digital currency, while the central bank of
Sweden says it has initiated a pilot project.
The U.S. Federal Reserve is taking a more long-
term view. Lael Brainard, a member of the board
of governors at the Fed, said in August that
the Fed would need to ask how U.S. law would
apply. She said no decision had been made “as