The European Central Bank (ECB) could launch the digital euro as a vehicle through which to maintain the option that citizens have access to safe money and avoid the risks of total dependence on private means of payment in the event that the decrease in the use of ATMs becomes a permanent phenomenon and not a one-off.
This has been stated by the governor of the Bank of Spain, Pablo Hernández de Cos, during his intervention in the Annual Financial Convention organized by the Association of Financial Markets (AMF). In the event that the drop in the volume of withdrawals at Spanish ATMs maintains this trend, Hernández de Cos considers that the public alternative that cash offers to private means of payment could be discontinued.
The Governing Council of the ECB established a high-level group to deepen the analysis and broaden the Eurosystem’s understanding of the digital euro. The results of this work are collected in a report that reflects not only its preliminary conclusions, but also outlines a roadmap for the future.
Specifically, the report’s main contribution to the current debate has been to identify the scenarios that, if materialized, could justify the launch of the digital euro as one of the possible actions to be considered. “We have tried to elucidate when a digital euro could be a good ally that allows us to continue fulfilling the mandate and objectives of the Eurosystem,” said the Governor of the Bank of Spain.
“Our role requires us to be technically prepared in the event of developments at some point that would make it advisable to put it into circulation”, Hernández de Cos added.
In any case, it has recognized that the introduction of an instrument of this nature involves “enormous complexity and significance”, so that, beyond the stimulating intellectual debate that opens up about its possibilities in the future , requires a deep analysis of its various implications and possible configurations.
In addition, the negative impact on financial stability that a possible bank disintermediation or the possible effects of the digital euro would have in situations of instability should be minimized.
ECB review
In recent years, several central banks have initiated processes to review their monetary policy strategies. The ECB announced in January of this year the start of the review of its monetary policy strategy.
The emergence of Covid-19 has delayed this process, which is expected to last for part of next year. Given that it is an ongoing process, it is not yet known what its conclusions will be, but it has been anticipated that it is an open process.
“Both the ECB and the national central banks of the Eurosystem are conducting a great deal of analysis and requesting their opinion from civil society, academic economists and other professional and social groups,” said Hernández de Cos.
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