European Central Bank, Panetta: “Digital Euro pillar of monetary sovereignty”
The member of the Executive Committee of the ECB: “The electronic currency issued by the Eurosystem will be the payment instrument for everyone. But it is essential to guarantee a product that is useful to interested parties ”
05 Nov 2021
Central bank money “represents the fundamental reference for all other forms of money in the economy” and “assumes a fundamental importance for the transmission of monetary policy, to guarantee the value of money and monetary sovereignty”. This is what Fabio Panetta, member of the ECB Executive Committee, said in his speech at the Royal Elcano Institute in Madrid, explaining that given the rapid digitization of payments, central banks must prepare to face a future characterized by less use of cash, in which the convertibility of private money into sovereign currency will have to be guaranteed by a public currency in digital form.
Euro digital payment tool for everyone
For this reason, explains Panetta, “the assertion that the wide availability of private digital means of payment would make central bank digital currencies superfluous does not take into due consideration the essential role played by sovereign money in the payment system and more in general in the financial sector “.
Consumers will be available to make use of the new digital currency “if they can use it in a widespread way in commercial establishments. At the same time, merchants will want the certainty that consumers will use it. In turn, intermediaries will undertake to distribute the digital euro if by doing so they obtain benefits that exceed the costs. It is therefore essential to guarantee a product that is useful to all interested parties “. This is why “we are working to make the digital euro a means of payment for everyone – families, businesses, traders, intermediaries. To offer the system
a monetary anchor in the digital age “.
European digital coin, an anchor for the monetary system
“The trust that citizens place in each type of money issued by private individuals – underlined Panetta – is based above all on the possibility of converting it one by one, at face value, into the safest form of money existing in the economy, or precisely the public money issued by the central bank, the anchor of the monetary system ”.
Today, in the face of the digital revolution underway, almost half of European consumers declare that, given the choice, they would opt for alternative payment instruments to cash. In addition, online sales in the euro area have doubled since 2015. Cash is used more and more as a store of value and less and less as a means of payment, especially after the outbreak of the pandemic.
Guarantee a useful product for all subjects
While on the one hand the cash stock has continued to increase, fueled by the increase in demand for precautionary purposes, on the other hand the share of banknotes held for settlement purposes has decreased to 20% from 35% 15 years ago. “If these trends were to continue, becoming more accentuated – added Panetta – cash would lose its central role, becoming an inexpensive means of payment.
used when it does not comply with the needs of consumers. Just as postage stamps have progressively lost their usefulness with the advent of the Internet and e-mail, cash also risks losing relevance in a digital economy “.
In addition to the typical strengths of the sovereign currency, the success of the digital euro will depend on the conditions for its use. “In addition to being risk-free – concluded Panetta – it must be an efficient payment tool, widely available and easily usable by anyone to carry out electronic transactions. It is therefore essential to guarantee a product that is useful to all interested parties “.