During the ‘Retail Payments Strategy’ webinar held Wednesday , the European Commission’s Eric Ducoulombier, head of retail financial services and payment unit, spoke to the subject of digital currencies and the future of a digital euro.
In light of the ECB’s recent discussions and launch of a public consultation on the possible creation of a digital euro, Ducoulombier emphasised the role the private sector should play.
“A digital euro solution should not crowd out solutions that come from the private sector. In the ECB report, it is highlighted that such a solution would be complementary to private sector opportunities. There should not be rivalry or competition.”
He notes that it is vital to have this debate right now and that it is a positive sign that the debate is already well underway in Europe, especially given the emergence of digital based payment solutions such as Libra.
Ducoulombier underscores that while the progress already made by the European Payments Initiative (EPI) has been and will continue to be welcomed, the EPI is not a project which is designed and led by the commission or EU institutions.
In order to foster the progress being made by such bodies, he explains, a high level of complementarity between the payment solutions developed by the private sector and necessary intervention of public authorities would need to be achieved, and may require these solutions occupying different parts of the market.
“There is no intention by EU institutions to throw banana skins in the way of creating private sector solutions.”
Significant shifts in payments trends due to covid-19 have lit a fire under the push for digital currencies. Hand-in-hand with increasing consumer confidence around using digital payments has come reluctance toward using cash.
At a virtual IMF event this week, it is reported that ECB president Christine Lagarde said “A digital euro will never be a substitute for cash. It is a very good supplement and a very good partial substitute for what was being done physically.”
Ducoulombier notes that if a digital euro were to compensate for a progressive phase out of cash, questions as to issuance and safeguarding the legal tender of cash would need to be addressed, and there would be implications of this decision for private sector solutions.
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