ECB president Christine Lagarde “pushing for digital euro to become reality by October”
The European Central Bank (ECB) believes that the adoption of the digital euro will lead to the withdrawal of five out of every 10 physical euros in circulation, according to a report released over the weekend.
Lusa news agency reports that the institution led by Christine Lagarde defends the project as a matter of strategic sovereignty – but the ECB president herself admits that it cannot move forwards without the support of what she calls ‘stakeholders’: European parliament, European Council and European Commission, who need to “complete the legislative process”.
The actual quantity of digital euros (or CBDCs as they are known in English) in circulation in the eurozone will be determined by household demand, just as household demand determines the quantity of banknotes in circulation, writes Lusa.
Based on this premise, the ECB estimates that for every 10 digital euros issued, five physical euros will be withdrawn from circulation and bank deposits will lose three.
The ECB has considered three possible scenarios, depending on whether demand is low, medium or high: in the first case, the drop in banknotes would be 15 billion; in the second, 125,000; and in the third, 256,000.
The ECB’s calculation also includes coins, which are quantitatively much less relevant than banknotes, says Lusa.
This information has been taken by advocacy group Citizen Go to suggest there is a lot going on behind the scenes that everyday people could be unaware of.
The site warns that this centralised currency “could soon replace physical money” and that this carries a number of issues. This is not the message coming from the ECB, which describes the digital currency as “an electronic equivalent to cash” which “would complement banknotes and coins, giving people an additional choice about how to pay”. According to a Euronews report earlier this year, the ECB president believes the digital euro will actually reinforce Europe’s financial autonomy.
Nonetheless, CitizenGo has drawn up a petition, entitled “Don’t touch our money: Stop the Plan for the Digital Euro of the EU”, which is rapidly gathering support.
Much of the warnings in the text could be over-exaggerations. Indeed, CitizenGO is described online as an ultra-conservative advocacy group. The ‘good news’, however – as conceded by Christine Lagarde – is that the launch of the digital euro is dependent on its approval by elected members of the European Parliament. And thus the petition gathering signatures calling on Euro MPs to protect people’s financial liberty and privacy could very possibly ensure ‘extra scrutiny’ of the plan, before it is given the green-light.
Source material: LUSA/ Crypto News/ CitizenGO
