The European Central Bank (ECB) will decide on issuing a digital euro by mid-year, with a maximum holding cap of around €3000. These expectations were shared by Governing Council member Fabio Panetta in an interview with Der Spiegel.
The official argues that such restrictions on the central bank’s digital currency (CBDC) will shield financial institutions from deposit losses and meet the needs of the majority of citizens. He added that a decision on the concrete figures has not yet been taken.
«The digital euro does not destabilise the financial system and the banking sector. If the public decides to convert a substantial portion of cash into CBDC, we will provide credit institutions with more liquidity», — the ECB official said.
Panetta emphasised that the regulator does not intend to compete with commercial banks. The potential issuance of CBDC should be viewed merely as a financial service with an “additional digital option”.
The official also touched on the privacy aspect of the digital euro.
«During the consultation phase we received more than 8,000 responses. The biggest concern among respondents is data protection. They say their personal data should not be used inappropriately. The ECB can guarantee this», — he noted.
In the interview, Panetta confirmed the previously voiced view of the regulator’s head Christine Lagarde on the timeline for the digital euro’s release. Like the chair, he suggested that it would take “four to five years” before practical deployment. That is the time needed for consultations with lawmakers and to resolve technical questions.
The ECB representative also allowed that the regulator might follow China’s lead and test CBDC in various European cities. He calls this a “wise step”.
As reported, the total amount of digital yuan issued will reach 110 million (~$17 million). The Agricultural Bank of China has developed a hardware wallet with CBDC support and offline payments.
Subscribe to ForkLog news on Twitter!