The central bank said it would reach a decision on issuing a digital euro “near the middle of 2021”.
In an interview today, Fabio Panetta, Executive Member of the European Central Bank, said that the ECB may only allow digital euro holdings “up to a certain limit” but added that the introduction of the central bank’s digital currency is unlikely to cause banks to lose deposits. Specifically, Panetta said this limit “could be around 3,000 euros” – worth nearly $ 3,600 – which he said would still satisfy most people’s cash needs.
He added that these numbers “are still under discussion” and that the European Central Bank has not yet decided to set a ceiling for digital euro payments. Panetta stressed that the ECB will not compete with commercial banks, but only provide financial services with “another digital option”.
“The digital euro will not destabilize the financial system and the banks,” Panetta said. If people decide to convert some of their money into digital euros, banks will not lose any deposits. And as I said, we will discourage large holdings of the digital euro. If the banks actually lose deposits, we can provide them with more liquidity. “
Panetta added that the results of the consultation launched by the European Central Bank in October on the digital euro showed that the number one concern for many was privacy:
“We received 8,000 responses during the consultation phase. What people care most about is data protection. They consider it important not to use their personal data inappropriately, which is something that the central bank can guarantee.”
The European Central Bank has already postponed the timeline suggested by President Christine Lagarde on when he would come to a decision on the launch of the digital euro. According to its website, the central bank will decide “towards mid-2021”. From this point on, according to Panetta, the European Central Bank could launch the digital euro in “four or five years” after consulting with lawmakers and deciding on technical solutions.
A member of the European Central Bank’s executive board said the institution will try to dissuade people from holding large amounts in digital euros after the currency is released in the next five years.
Authorities in China have already begun trials of digital yuan in select cities across the country, resulting in thousands of residents getting free money as part of the lottery. Panetta said that trying central bank digital currencies in various European cities “might be a wise move” as part of the startup.