The decision on a digital euro could take a long time.
The financial authorities in Europe could work out an investigation plan for a digital euro as early as next year, according to a manager at the European Central Bank
Holger Neuhaus, Head of the Department for Market Innovation and Integration at the ECB, took part in the Singapore FinTech Festival 2020 on December 7th and spoke about the global development of digital central bank currencies (CBDCs).
In the online discussion, Neuhaus claimed that the ECB expects the European tax authorities to check by mid-2021 whether they want to work on a digital euro:
„In mid-2021 the euro system will examine whether a project for a digital euro should be launched. But I would like to emphasize that this would only be an investigation phase and not a decision. That would basically enable us to actually work out a plan. Then we would talk about what a digital euro could be, what it could look like, how it could be implemented and whether and when a political decision would be made. “
Neuhaus emphasized that a digital euro would only complement, not replace, cash or large customer central bank deposits. He also noted that central bank digital currencies would pose major challenges when used overseas, particularly with regard to cash flow management and relative compensation issues.
„This is where it becomes difficult and we have to think about how we can limit that. With fixed limits, be it with incentive systems or other possibilities,“ says Neuhaus.
Regarding CBDCs in Europe, Neuhaus also spoke about the ECB’s public consultation on a possible digital euro. This consultation was published in mid-October 2020 and aims to collect feedback from public and private people to assess whether Europe needs a digital euro.
In November 2020, ECB President Christine Lagarde asked the bank to make a decision on the introduction of a digital euro in January 2021.