The E-Euro is coming

The euro is going digital. In addition to coins and notes, there will also be a virtual version in the future. This was announced by the head of the European Central Bank (ECB), Christine Lagarde.

She did not say how the “e-euro” will work and who will receive it. It could take another five years until all open questions are clarified and it is introduced, Lagarde said.

Yet the ECB has already been working on the “e-euro” for months. Alarmed by reports of the new virtual Facebook currency Diem (initially Libra), which could compete with the euro, the central bank set up a group of experts and consulted citizens and businesses.

The survey has now ended with record participation – 8221 responses were received, the ECB said.

“The high number of responses to our survey shows the great interest in shaping the vision of a digital euro,” ECB Executive Board member Fabio Panetta highlighted in Frankfurt.

A “no” was not on the cards

However, the results will not be presented until spring. A “no” to the “e-euro” was not on the ballot in the online survey, which was apparently intended primarily to ensure acceptance.

Rather, it was about details such as data protection, security and Europe-wide availability. Unsurprisingly, most respondents were interested in data protection and anonymity – after all, the ECB has already indicated this.

How this is to be guaranteed in practice, however, remained open. It is also unclear how the “e-euro” is to be designed – and who will get it.

One much-discussed possibility is to make the digital money accessible to all citizens – but only up to a maximum value, about 100,000 euros. This amount could serve as a bomb-proof deposit because it is guaranteed by the central bank.

But even the question of whether the digital account would be located at the ECB, or at normal banks or savings banks, divides opinions.

The commercial banks would like to get in on the act – after all, they fear losing a massive amount of business otherwise. But how can “normal” and digital accounts be distinguished from each other? What happens in a crisis?

Some experts fear that a “run” on secure digital money could then begin. Instead of strengthening the euro, the “e-euro” could cause new turbulence.
Dispute behind the scenes

What is certain is that commercial banks, fintechs and the European central banks – including the German Bundesbank – are wrangling fiercely behind the scenes over the details of the digital currency.

Parliaments on the sidelines

Meanwhile, the Bundestag and the European Parliament are sitting on the sidelines. Many MEPs fear that the new digital currency could sooner or later do away with cash.

But the ECB is appeasing them: The digital euro should not replace cash, but only complement it, Lagarde assures. However, coins and notes are already being displaced by electronic means of payment.

Cash is becoming rare – and that long before the introduction of the “e-euro”…

Translated with (free version) The original post (in German) is here