An executive board member of the European Central Bank (ECB) revealed that the digital euro could be out by 2026 with a person-to-person payment solution. Fabio Panetta, in a speech at the National College of Ireland, highlighted that the ECB could start the development and testing of solutions in 2023. The executive said that Europeans would be more likely to accept a digital euro to address their payment needs – in physical and online stores.
He believes making the digital currency legal tender and for use in P2P payments could promote adoption. With the risks being brought forth following the depegging of UST, Panetta pointed out that stablecoins were not “risk-free” and are still vulnerable to runs. He said stablecoins contain certain risks just like cryptocurrencies.
The ECB executive says it’s an illusion to believe that private instruments can act as money when they cannot be converted at par into public money at all times. He shared that cryptocurrencies are too risky to act as a reliable means for payment. Digital currencies act more like speculative assets and raise multiple public policies and financial stability concerns.
Panetta said the ECB will ensure that cash remains available. But it is likely that cash will lose its central role and its ability to provide an effective anchor as consumers shift to digital means of payment. It could be accentuated by the expansion of big techs. However, it could result in an uneven playing field that harms competition and raises data privacy concerns.