Only a digital euro that is widely accepted by European users could be considered a success, according to the European Central Bank (ECB).
The ECB published key objectives for the digital euro in a blog post authored by the bank’s President Christine Lagarde and executive board member Fabio Panetta on Wednesday. An accompanying document laid out some basic design considerations for a digital version of the European Union’s single currency meant for public use.
“The digital euro can only be successful if it becomes part of the everyday lives of Europeans. It must add value compared with existing solutions,” the post said.
In the post, the two said it’s too early to settle details of the design, but the bank expects to wrap up the investigation phase of the project in the autumn of 2023.
The ECB initiated the digital euro project in June 2021, and kicked off a two-year investigation phase into a retail central bank digital currency (CBDC) in October. Since then, the European Commission, the EU’s executive arm responsible for proposing new legislation, said it will introduce a digital euro bill in 2023.
Meanwhile, the ECB has been largely reticent about the details and findings of its experiment, apart from sporadic hints about a digital euro possibly launching within the next four years, and how the ECB would likely move to limit the amount in circulation to 1.5 trillion euros ($1.5 trillion) to control the negative effects it might have on financial stability.
Lagarde and Panetta also said the digital euro is intended as a means of payment, not a form of investment.
“Otherwise too many commercial bank deposits could be moved to the central bank – a scenario which would make it more difficult for banks to lend to consumers and companies, and which could even generate tensions in the banking system during times of financial stress,” the post said.
Although it’s too early to specify the design elements of a digital euro, some objectives are clear, the report said.
“First, a digital euro must respond to the needs of its users,” the officials said, adding that according to research, users value wide acceptance, ease of use, low costs, high speed, security and consumer protection the most.
A digital euro should also benefit people who currently have limited access to digital payments, the report said.
The officials also presented the case for a digital euro.
“Introducing a digital euro would ensure that citizens can continue to trust in the monetary anchor behind their digital payments. It would protect the strategic autonomy of European payments and monetary sovereignty, providing a fall-back solution if geopolitical tensions intensify,” they wrote.