The president of the European Central Bank (ECB) has said the institution doesn’t have immediate plans to issue a digital currency. The Bank’s chief said there are no concrete plans to issue the digital Euro since fiat cash still rules the zone.
ECB President Shrugs off Idea
The ECB president Mario Draghi, in a communication to a member of the European Parliament, said the technology behind cryptocurrencies was still fragile adding that the use of physical cash in the European Union was still high. He said:
“The ECB and the Eurosystem currently have no plans to issue a central bank digital currency […] nonetheless; we are carefully analyzing the potential consequences of issuing such a currency as a complement to cash.”
Draghi suggested that the Distributed Ledger Technology, which would form the basis on which to build a Central Bank Digital Currency (CBDC), requires to be developed further. He explained the reason ECB was taking this stance by drawing attention to the same factors saying:
“The technologies which could potentially issue a central bank digital currency […] have not yet been thoroughly tested and require substantial further development before they could be used in a central bank context”
He added it would imply the central bank would enter into competition for retail deposits with the banking sector and lead to potentially substantial operational costs and risks.
ECB Believes Blockchain Yet to Mature
The European Central bank conducted research in 2017 and deduced that 78.8 percent of payments at points of sale were still on cash basis across the EU territory. According to the same study, Debit and Credit cards accounted for 19.1 percent were the remaining 2.1 percent was made using other kinds of instruments.
While the European Central Bank sits as the fence thinking blockchain is still a “teenager” and doesn’t warrant the status of a national digital currency, other central banks have “seen the light” and are increasingly spending their time and resources to investigate the possibilities.
The Bank of Thailand said in late August it was completing its first phase phase-of-concept trial for a Central Bank Digital Currency by March next year and was partnering with eight local institutions to build a blockchain-based product. China is also quietly making giant strides towards the launch of its own CBDC; we reported earlier this month China’s Central Bank (PBOC) had filed 40 blockchain patent applications towards the same course.