He said that there were many questions to be
answered and that “a decision about whether
or not to issue a digital euro will only come at a
later stage.” If the idea gets a green light at the
end of two years, it would take three more to
actually develop the digital euro.
The central bank for the 19 countries that use
the euro is launching the in-depth study after
already gathering input from citizens and
financial professions. The U.S. Federal Reserve
is also looking into the implications of issuing a
digital currency.
In simple terms, a central bank digital currency
would be a digital banknote. It could be used
by individuals to pay in shops, or each other.
The Bank for International Settlements, an
international association of central banks, says
digital currencies issued by central banks could
promote diversity in payment options, make
cross-border payments faster and cheaper,
increase financial inclusion for people without
bank accounts, and possibly facilitate fiscal
stimulus transfers in times of economic crisis,
such as a pandemic.
A BIS survey showed that 86% of central
banks were researching the potential for
digital currency, 60% were experimenting
with the technology and 14% were deploying
pilot projects.
They would be different from cryptocurrencies
such as Bitcoin because central bank digital
currencies would be legal tender and thus usable
for any transaction, and their value would remain
stable. Panetta said they would also be more
environmentally friendly, since they would use
less electricity than “mining” or creating Bitcoin.