ECB may legitimize state cryptocurrency as legal tender within two years

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European Central Bank (ECB) board member Fabio Panetta said the state digital currency could become legal tender in the European Union within two years.

At a meeting of the Intergovernmental Commission on Economic Cooperation held in Helsinki on Tuesday, Fabio Panetta said that if the Central Bank continues to launch its own digital currency, then in a couple of years, the new form of money will become legal tender in the euro area. However, he cautioned that obtaining legal tender status “should not be taken for granted.”

This status could potentially give a central bank-issued digital currency an edge over other forms of electronic payment in Europe that are not recognized as legal tender. If the ECB manages to make the government’s cryptocurrency profitable and guarantee its usability, it could provide wider distribution than critics of the project suggest.

Panetta last week denied claims that the central bank’s digital currency would be “surplus” among alternatives and said the central bank would make it attractive enough to stimulate use for payments. He also warned that if the state’s cryptocurrency is used as a store of value, it will harm the banking system of the European Union.

Elvira Nabiullina, Chairman of the Central Bank of Russia, agreed with Panetta. She stressed the importance of “a smooth transition between forms of money”, calling it “critical to public confidence in this money.”

“We believe that digital currency will be recognized as legal tender, it will be mandatory for sellers,” Nabiullina said.

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