The digital Euro will not be available from the central bank, but via commercial banks

Discover in video Nathalie Janson’s prediction about the digital Euro. According to her, it will not be available directly via the European Central Bank but via commercial banks. The reflections presented in this prediction series also touch on other ideas of the macroeconomic order. We invite you to discuss each prediction made by sharing your opinion with us.

Review of the development of central bank digital currencies (MNBC)

Since the announcement of the Crypto Investor project, central banks have been rushing to develop their own digital currencies. China is by far the most advanced with initial experiments such as the distribution of its digital yuan in a pilot city . But other countries are not left out. Many announcements have taken place in recent months, Australia, Sweden, Germany and France are developing projects. In early November 2020, the European Central Bank launched a public consultation on the digital Euro .

China, by rapidly developing its digital yuan, intends to take advantage of the first mover advantage. This would allow their digital currency to be rapidly internationalized.

In response, the Americans have also initiated a fundamental reflection on the possibility of a digital dollar.

Impact and dissemination of the digital Euro

According to Nathalie Janson, this digital Euro would be “both a competitor of cash and dematerialized means of payment linked to bank accounts such as credit cards, PayPal , Apple Pay, Lydia or even PayLib. The degree of competition will depend on the level of traceability of transactions with the possible possibility of having an offline / online version of the digital Euro. “

2 distribution models would exist:

The currency would be issued by the Central Bank and directly accessible by individuals. This will mean that individuals should have an account or wallet open with the Central Bank. The risk being that the public prefers “the digital version of the Euro at the expense of cash but above all at the expense of bank accounts. “

A digital currency still issued by the central bank and accessible through commercial banks
If the first solution were preferred, this would mean that individuals would have to have an account or wallet open with the Central Bank. The risk being that the public prefers “the digital version of the Euro at the expense of cash but above all at the expense of bank accounts. This could result in a drop in deposits in banks which would make it difficult to make loans available.

The second solution makes it possible to reduce the risk of the digital Euro being substituted for cash and other means of payment. And therefore to preserve banking stability.