ECB adviser: “testing the digital euro does not guarantee its launch”

Jürgen Schaaf, Advisor for Market Infrastructure and Payments Development at the ECB, said studies of the possibilities of the digital euro do not guarantee its launch at all.

Speaking at the Bitkom Digital Euro Summit, Jürgen Schaaf announced that the European Central Bank will continue to experiment with the digital euro over the next two years. However, the final decision to launch the digital currency of the Central Bank will be made if its benefits outweigh the possible risks. Schaaf believes that this serious decision cannot be made hastily, so careful research that can take an indefinite amount of time should not be neglected.

Earlier, ECB analysts concluded that central banks need to launch their own digital currencies as soon as possible, otherwise it will be difficult for them to compete with tech giants. In addition, according to Bison Trails, about 80% of central banks are already exploring scenarios for using government stablecoins.

However, Schaaf is convinced that the ECB cannot be compared to the Central Bank of the Bahamas, which in 2020 became the first central bank to launch the state-owned cryptocurrency, the Sand Dollar. Schaaf warned other countries against radical experiments at the state level, referring to the legalization of bitcoin in El Salvador.

“In fact, we are not progressing so slowly in learning about the digital euro. You can’t play with money. We cannot conduct large-scale experiments that will shake society and the entire financial system. Everything that the ECB has to provide must be really reliable and safe, ”Schaaf said.

He added that the ECB is currently conducting research on a retail digital euro that ordinary citizens can use to buy goods and services. The introduction of a retail digital currency will not have a disruptive effect on the economy, Schaaf said. Perhaps at a later stage, the ECB will begin experimenting with a wholesale digital euro, which will be available to banks and financial institutions. Schaaf explained that over the past few years, people have stopped using cash, and the situation has been exacerbated by the pandemic. Therefore, the digital euro will not replace ordinary money, but will only add to it.

“There are fears that Europe’s financial stability will be threatened when big tech companies crowd out banks by providing alternative solutions. This is what motivates the ECB to explore the possibilities of the digital euro, ”Schaaf said.

According to Morgan Stanley analysts, the digital euro can “absorb” about 8% of funds from commercial banks operating in the European Union.