Notes on the future digital euro
Pablo Hernández de Cos, Governor of the Bank of Spain, analyzes in this article several key points on how the "ambitious" challenge of creating the future digital euro should be approached, a topic on the rise as a result of the growing digitalization of the economy and the emergence of new financial products and services and new possibilities such as the issuance of digital currencies by central banks.
In a brief article, Pablo Hernández de Cos provides some keys about the reasons for issuing a digital euro and what it would mean for the future of the eurozone:
- Digital currency, a third leg between physical money and bank deposits. "The digital euro would not replace neither physical money nor bank deposits, but would complement them, what would broaden the supply of means of payment." The future digital euro would be issued directly by the European Central Bank, would have a digital representation and could be used in a wide range of remote transactions that are not possible with cash.
- Some central banks are ahead, although not all share the same reasons: Financial inclusion, to reduce the use of cash or the difficulty of logistically providing banknotes and coins, as well as -in the case of China- "the need to find a public counterweight to the prominence that large technology companies have acquired in the field of payments", would be the reasons that explain why the Central Banks of China, Sweden or Bahamas are ahead in the issuance of digital currencies.
- Reasons to issue a digital euro. According to the Governor of the Bank of Spain the reasons would be related to the mission and objectives of the European Union, and could be grouped into two areas:
- Digitalization of the economy and society: The digital euro would stimulate innovation, competitiveness and growth and would accompany the technological change that society is undergoing.
- Monetary sovereignty and the role of the eurozone in the new order: It would constitute an essential support to safeguard our monetary sovereignty and could increase the external role of our currency and the eurozone's influence capacity on the international stage.