Fabio Panetta, Member of the Executive Board of the European Central Bank (ECB), outlined at the ECB Conference "A new horizon for pan-European payments and digital euro" a number of scenarios where usage of a digital euro could be beneficial.
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According to Panetta, digital currencies could be vital if people would become reluctant to use cash or other electronic payment methods could become unavailable "owing to natural disasters."
"European authorities must be attentive and ready to respond to the ongoing transformation of the European payments landscape," the ECB official said.
In the meantime, Panetta sees several challenges that could come alongside the introduction of a digital euro. The potential digital currency might have both technical issues, such as cyber risks, and legal ones, including an impact on monetary policy.
"A properly designed digital euro would need to address such risks. We have started to explore appropriate strategies, for example in relation to the remuneration of digital euro holdings and the protection of privacy," Panetta points out.
Earlier, iHodl reported that the ECB had revealed a report on the issuance of a central bank digital currency (CBDC), prepared by the Eurosystem High-Level Task Force.
ECB President, Christine Lagarde, says the regulator "should be prepared to issue a digital euro, should the need arise." In a 50-page report, the Eurosystem High-Level Task Force describes the potential effect of a digital euro and implied requirements, legal consideration and organizational approaches.
It is expected that the watchdog will decide whether to launch a digital euro project or not in the middle of 2021.
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