Fabio Panetta, member of the Executive Board of the European Central Bank, gave a keynote address at the ECB conference discussing pan-European payments and the digital euro.
The purpose of Panetta’s address on October 22 was to address transformations in the European digital payment landscape. “The European market is registering significant progress due to the digital revolution,” Panetta said. One significant actor in the digital revolution, he said, is the digital euro.
"A digital euro could become necessary in a number of scenarios,” Panetta says. Such situations include if natural disasters obstruct electronic payment methods, people become reluctant to use cash (which increased during the pandemic, The Block reports), and if foreign digital payment methods threaten to displace domestic money, he said.
As it stands, Eurosystem stakeholders have yet to officially give the stamp of approval for a digital euro. But discussions about it have become more frequent, and recent developments — including the push in China to launch a central bank digital currency — could spur such conversations.
Panetta notes that European consumers and businesses largely prefer cashless transactions. The volume of total cash-based transactions fell from 79% in 2016 to 73% in 2019, according to the address. A digital euro would make digital central bank money more accessible to Europeans, but increase the risk of cyber attacks and reduced activity of banks.
To address these concerns, the Eurosystem created a strategy including introducing a new comprehensive oversight framework embracing new digital products and players, preparing for digital euro issuance, and deploying instant payment methods throughout the entire euro area.