The financial authorities in Europe might undergo an investigation plan for its upcoming digital euro as early as by next year, in line with an official at the European Central Bank.
The head of the market innovation and integration division at the ECB, Holger Neuhaus, joined the Singapore FinTech Festival 2020 on 7th Dec. to discuss the global development of CBDCs.
Within the online discussion, Neuhaus added that the ECB expects European financial authorities to assess whether to launch a virtual euro protocol by the mid of next year.
“In mid-2021, the Euro system will consider whether to launch a digital euro project. But just to highlight, it would be an investigation phase, not the decision yet to implement. It would basically permit us to come up […] with actually a plan, and what could be a digital euro, how could it look like, how could it be implemented, if and when a policy decision is taken.”
Neuhaus stressed that a digital euro would complement, not substitute cash or wholesale central bank deposits. He also added that central bank digital money poses big challenges when it comes to CBDC use abroad, particularly linked to capital flow management as well as the relative remuneration question.
“That’s where it becomes an issue and that’s where we were left to think of how to limit it – with tough limits, whether with incentive schemes or whatever,” Neuhaus suggested.
Considering CBDCs in Europe, Neuhaus added that the ECB’s public consultation on a potential digital euro. Revealed earlier in mid-October this year, the consultation intends to collect feedback from the public as well as private stakeholders to evaluate whether Europe requires a [digital euro].