The central bank said it will reach a decision on releasing a digital euro “towards the middle of 2021.”
In an interview today, Fabio Panetta, executive member of the European Central Bank said the ECB may only allow digital euro holdings “up to a certain threshold” but added that the rollout of the central bank digital currency was unlikely to cause banks to lose deposits. Specifically, Panetta said that this threshold “could be around €3,000” — worth roughly $3,600 — which he said would still meet most people’s cash needs.
He added that these figures were ”still under discussion” and that the ECB had also not yet decided on a cap for digital euro payments. Panetta emphasized that the ECB would not be competing with commercial banks, but rather just offer financial services with “one more digital option.”
“The digital euro won’t destabilise the financial system and the banks,” said Panetta. “If people decide to turn some of their cash into digital euros, the banks won’t lose any deposits. And as I said, we will discourage large holdings of digital euro. If banks do in fact lose deposits, then we can make more liquidity available to them.”
Panetta added the results of the consultation the ECB launched in October on a digital euro showed that the first concern for many was privacy:
“We received 8,000 responses during the consultation phase. What people are most concerned about is data protection. They consider it important that no improper use is made of their personal data, which is something that can be guaranteed by the central bank.”
The ECB has already pushed back the timeline proposed by President Christine Lagarde of when it should reach a decision on releasing a digital euro. According to its website, the central bank will decide “towards the middle of 2021.” From that point, according to Panetta, the ECB could launch a digital euro in “four or five years” following consultations with lawmakers and deciding on technical solutions.
A member of the executive board of the European Central Bank said the institution would attempt to discourage people from holding large sums in digital euros after the currency is released in the next five years.
Authorities in China have already begun trials of a digital yuan in select cities across the country, resulting in thousands of residents receiving free money as part of a lottery. Panetta said that trialing a CBDC in different European cities would also “probably be a wise move” as part of the rollout.