The European Central Bank has entered the global race to digitize the national currency. On the official website, the regulator states that the digital version of the single currency will appear in the near future.
The digital euro will be quite similar to the cryptocurrency but the central bank tends to avoid the term "cryptocurrency". According to the ECB, virtual money will be a great alternative in the event of a sharp decline in demand for cash. "Nowadays, central banks are entrusted with the fundamental task of providing citizens with costless access to simple, secure and risk-free means of payment that can be used on a large scale. Delivering on this task requires central banks to analyse relevant developments in society and adapt accordingly", Fabio Panetta, Member of the Executive Board of the ECB, pointed out. The coronavirus pandemic has become a catalyst for speeding up the implementation of digital technologies, which will help maintain financial activity in case of any shocks, including new epidemics or natural disasters. "In particular, it (the digital euro) would be needed in the event that citizens become reluctant to use cash as they go digital. This trend has accelerated during the pandemic – with a vast majority of consumers expecting to continue using digital payments as often as they do now, or even to use them more often in the future", the ECB official added. For this reason, the regulator must take measures to complement cash, not replace it. By introducing these two types of money, the central will bank will offer greater choice and easier access to ways of paying.
It is still difficult to understand how the introduction of the state cryptocurrency is consistent with the main principle of cryptocurrency operation. Digital money is characterized by decentralization and independence from state control. Therefore, the ECB may face serious problems on its way to the digital euro. Yet, it is sure to tackle this issue.
