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The report raises further questions to study the digital euro officially.

The European Central Bank (ECB) may begin serious consideration and study the digital euro in mid-2021, the bank said in a report released on 2 October.

The report examined how a digital euro can affect retail payments and how it can protect payments in the future. It also examines how virtual currencies can fit into the landscape of the whole Eurosystem. However, it does not specify which model the ECB should follow, nor when and if it projects its digital currency.

On the basis of the report, the ECB may start a virtual money programme „to ensure that significant answers are obtained to the open questions“ by the middle of next year, possibly with a research phase to develop the digital euro and carry out experiments. He added that before the issue can be discussed, the ECB must consider the views of the various stakeholders.

The report noted that digital coins can bring more affordability:

„The possible advantages of a digital euro and the rapid changes in the retail payment landscape mean that the Eurosystem needs to be equipped to issue it in the future. A digital euro could support the objectives of the Eurosystem by providing citizens with access to a secure form of money in the rapidly changing digital world. This would support Europe’s drive for continuous innovation. It would also contribute to its strategic autonomy by providing an alternative to foreign payment providers for fast and efficient payments in Europe and beyond“.

The ECB said that there are several requirements that a digital euro must fulfil if it is to be created. The first is that it must keep pace with the technology and be made available „through standard interoperable front-end solutions throughout the euro area and be interoperable with private payment solutions“. Secondly, it must match the distinct characteristics of money, be easy for everyone to use, be free of charge and protect privacy. The digital euro should also have features „at least as attractive as payment solutions available in foreign currency or through unregulated entities“ and should be a tool to improve the transmission of monetary policy. It should also be widely available through resilient channels separate from other payment services and can withstand extreme events such as a global pandemic.

The ECB also said that the digital euro should also be available outside the euro area, be economical and its design should be environmentally friendly, which means it should be based on technology that minimises ecological footprints.

For the Bitcoin Formula, a digital euro should be designed to avoid being used as a means of investment, or even being considered a cryptomoeda or a stablecoin. Instead, it should be used primarily as a form of payment to avoid price fluctuations:

„Given the risks to the transmission of monetary policy and financial stability, it is not desirable for the digital euro to attract large investment flows. However, if individual holdings of the digital euro were very low, either because of rigid restrictions or because of disincentives applied above a relatively low threshold, then the digital euro would be less attractive as a means of payment and less competitive than alternative instruments. ”

The report also discussed various technical and organisational models for launching the digital euro. While the report is comprehensive, the ECB has emphasised that it wishes to create a discussion on digital currencies with other stakeholders. It does not establish specific methods for the distribution of the digital euro.

ECB President Christine Lagarde said on 10 September that the euro system has not yet taken the decision to launch the digital euro or not, although Lagarde supports it and stresses that it will not replace the cash currency.