Fabio Panetta – Member of the Executive Board of the European Central Bank – revealed that the digital version of the euro might become a legal tender inside the European zone.
Digital Euro ‘Should Not Be Taken for Granted’
As Bloomberg reported, the Italian economist and member at the ECB – Fabio Panetta – hinted about the initiative during a panel discussion in Helsinki, Finland. He asserted that if the European Central Bank proceeds with its efforts of launching a digital currency, the new form of money will have all chances to become legal tender inside the borders of the EU.
Panetta added that the authorities will thoroughly examine the endeavor in the next two years. Nonetheless, the Italian opined that achieving such a move “should not be taken for granted,” and the financial institution must be extra cautious.
Last week, he opposed the argument that the digital euro will be “redundant” amid other alternative currencies as the ECB will aim to make its CBDC cost-effective and guarantee its usability. The latter is vital as it could provide for more widespread adoption among the general population. The Italian economist added that the central bank digital currency will be “attractive enough” to capture society’s attention.
During the event, Elvira Nabiullina – the head of the Bank of Russia – agreed with Panetta about how a central bank digital currency should look like.
A few months ago, she opined that CBDCs, working under government control, will represent the future of the financial network. On the other hand, she is a fierce critic of private digital assets, which in her opinion, are highly volatile, and investors could lose “colossal sums” if they deal with them.
Digital Euro Could Be Greener Than Bitcoin
Earlier this year, the European Central Bank highlighted its plans to launch an investigation phase of a digital euro project that will go on for 24 months. Within the testing period, the ECB’s research department will “aim to address key issues regarding design and distribution” as the digital version of the euro “must be able to meet the needs of Europeans.”
In addition, the CBDC should “prevent illicit activities and avoid any undesirable impact on financial stability and monetary policy.” Christine Lagarde – President of the European Central Bank – said the financial product should be “the safest form of money.”
Last but not least, the ECB promised that the digital euro’s energy consumption would be “negligible” compared to bitcoin’s. It is worth mentioning, though, that central bank digital currencies and the primary cryptocurrency are significantly different assets.
A CBDC is a digital version of a nation’s fiat currency where the Central Bank is still in complete control. It lacks any sort of decentralization as there is a single authority that’s shaping the monetary policy and regulation.
Bitcoin, on the other hand, is the complete opposite, which is why many believe that the emergence of a CBDC could push people towards BTC even more.