As time goes by and many innovations are being introduced to make the world a better place, so too are the innovations fundamentally testing the way in which money could operate in the future. Decisions will soon be made by policymakers to make the best out of these innovations. The European Central Bank could give a more secure and more effective choice to bank cryptocurrencies and money by presenting a public computerized euro. Currently, individuals have no choice but to utilize private banks, besides storing money under a sleeping cushion. Not many individuals know that the cash in their financial balances exist just like cash on a PC screen, and is lawfully the property of their bank. The bank owes cash to individuals, however, the cash doesn’t belong to them.
Physical money is the only type of cash that is really made by public national banks and that isn’t connected to a specific debt from a bank to people. When money is issued by the central bank, it also makes money for governments. This is known as seigniorage. Furthermore, money is the only framework for payment that is totally complimentary, and available to everybody, including the individuals who don’t have accounts in a bank. Truth be told, coins and banknotes are a significant public utility service.
Digital Euro: citizen-friendly
Positive Money Europe advocates for the presentation of a framework for public cryptocurrency in the Eurozone. And with such a system in place, citizens will be permitted by the ECB to store their money at the national bank and make a wide range of basic payments and exchanges with it. Fundamentally, a public cryptocurrency has similar properties as standard money (non-debt based and free of charge) on an advanced configuration. A digital euro would not be a substitute for physical money, it will only act as a complement to money. The framework would interact with the private financial systems so that individuals could move their cash out of their commercial bank accounts to their digital euro account and the other way around.
These systems would eliminate the financial framework’s restricted access to national bank cash. It would reduce the centralization of monetary force in some big institutions, by permitting individuals to utilize central bank cash too. Since individuals would be freer with their money and less public subsidies, which would compel the financial systems to be more competitive and ethically responsible.
In recent news, the European Central Bank (ECB) has confirmed that it is considering the option of a digital Euro for retail and wholesale. Last week, in Malaga, Spain, which took place the ECB officially stated its interest in a public cryptocurrency and is working towards that goal for the future, discussed at the Global Blockchain Congress. The bank has investigated it as both a wholesale and retail central bank digital currency and indicated that it has tried different things with blockchain before. The Association of German Banks delivered an itemized arrangement for a crypto-based digital Euro two weeks ago, saying regulators have to launch it.
ECB: Digital Euro will not be a substitute for cash
Christine Lagarde, the President of the European Central Bank, said that a digital euro could complement standard money, and not replace it. She also noted that any cryptocurrency issued in the European Union will not completely be a replacement for fiat. On September 21st, at an online talk for the Franco-German Parliamentary Assembly, she expressed that the bank was exploring the advantages, operational challenges, and risks of a European Central Bank Digital Currency and that fiat would still play a part in this digital world.
The ECB president said on September 10th that the Eurosystem had not yet made a decision whether or not to present a digital Euro. However, she said that a task force would be directed in the coming weeks to examine the potential effects that such an innovation could have on Europe when launched. Lagarde has for some time been in favor of the idea that national banks should build up an advanced euro to get them a step closer to digitalization. When she was the director of the International Monetary Fund (IMF), she indicated that she would concentrate on guaranteeing EU organizations adjust to the changing financial condition. Currently, Lagarde highlights that the European economy is still battling the COVID-19 crisis and that the move for a digital Euro is dependent on how well the pandemic is contained.