Fabio Panetta, Member of the Executive Board at the European Central Bank, revealed that the electronic version of the euro could become a legal tender within the European area.
Digital Euro “Should not Be Taken for Granted”
Bloomberg reported that Fabio Panetta, an Italian economist and member of the ECB, made a hint about the initiative at a panel discussion held in Helsinki, Finland. He stated that the European Central Bank should continue to launch a digital currency if it wants the new money to be legal tender within the EU’s borders.
Panetta stated that authorities would thoroughly review the venture over the next two-years. The Italian said that such a move should not be taken as a given and that the financial institution must exercise extra caution.
He resisted the argument that the digital currency would be redundant among other currencies. The ECB will try to make its CBDC affordable and ensure its usability. This is crucial as it could allow for greater adoption by the general public. According to the Italian economist, the digital currency of central banks will be “attractive enough” to attract society’s attention.
Fabio Panetta, Source: Reuters
Elvira Nabullina, the Bank of Russia’s head, agreed with Panetta on the design of a digital currency central bank.
She stated that CBDCs working under government control would be the future of the financial system a few months back. She is also a strong critic of private digital assets. These assets are volatile and could cause investors to lose “colossal amounts” if they are dealt with.
Digital Euro could be greener than Bitcoin
The European Central Bank announced earlier this year that it will launch a 24-month-long investigation phase for a digital euro project. The ECB’s research division will “aim at key issues regarding distribution and design” during the testing period. This is because the digital version “must be able meet the needs Europeans.”
The CBDC should also “prevent illicit activity and avoid any undesirable effect on financial stability and money policy.” Christine Lagarde, President of the European Central Bank, stated that the financial product should be “the most secure form of money.”
The ECB also promised that the digital currency’s energy consumption would not be as high as bitcoin’s. It is important to note, however, that the primary cryptocurrency and central bank digital currencies are very different assets.
A CBDC is an electronic version of a country’s fiat currency, where the Central Bank retains complete control. Because there’s only one authority who sets the monetary policy, and regulates it, it doesn’t allow for any decentralization.
Bitcoin is, however, the exact opposite. Many believe that the emergence and growth of a CBDC will push people even further towards BTC.
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