Key Takeaways:
- The digital euro study is supported by the Eurogroup, which also recognized aspects of the design.
- A digital euro needs to be a widely supported, democratically-based, and inclusive initiative that all of Europe shares.
The eurozone’s finance ministers met in Brussels and has now released a statement on the introduction of the digital euro. The political implications of the prospective digital currency are often discussed during Eurogroup meetings. On January 16, the European Central Bank (ECB) released a “stock-taking” report summarising the progress of the digital euro design at the same time as the announcement.
The Eurogroup statement highlighted the need for the European Central Bank and European Commission to update the Eurogroup and EU member states on the development of the digital euro, which is now in its investigation phase. The statement read:
“The Eurogroup considers that the introduction of a digital euro as well as its main features and design choices requires political decisions that should be discussed and taken at the political level.”
The group listed the issues it was keeping an eye on, which included the effects of digital currencies on the environment, privacy, economic stability, and related issues. It also expressed interest in non-eurozone member states of the European Union’s plans for central bank digital currencies. The group members promised that they stand ready to contribute to these discussions, adding:
“We also welcome the European Commission’s intention to table in the first half of 2023 a legislative proposal that would establish the digital euro and regulate its main features, subject to the decision of the co-legislators.”
That recommendation is intended to be made before the ECB Governing Council assesses the outcomes of the inquiry phase into digital currencies in the third quarter of the year. Additionally, they applauded the European Commission’s intention to provide a legislative proposal in the first half of 2023 that, if approved by the co-legislators, would create the digital euro and regulate its fundamental components.
In the third quarter of this year, the ECB Governing Council is expected to evaluate the outcomes of the investigation phase regarding digital currencies. The suggested modification is expected to be offered at this stage.
The Financial Times editorial by a former Bank of England adviser that claimed the cost and risk of creating CBDCs were not worth it was published after the Eurogroup’s announcement.
