A European Central Bank (ECB) published a report entitled “The International Role of the euro, June 2021”. The report outlined threats to countries who opt out of launching CBDC (central bank digital currency). It said to pay attention to the rising risk of their monetary autonomy and financial system.
CBDCs are a digital version of fiat currencies. The European Union’s digital version of its currencies is the euro. Government is highly interested in launching CBDC because digital fiat currencies make it easier to analyze financial transactions.
The report says, “Foreign tech giant’s potentially offering artificial currencies in the future,” akin to the Facebook Diem project that sent shockwaves through the financial world. Market dominance by this privately issued currency would become a threat to the stability of the financial system.
The ECB further mentioned that it could affect the central bank’s ability to fulfill its mandates and act as lender of last resort. Issuing CBDC would help to maintain the autonomy of domestic payment systems. Christine Lagarde, the ECB president, stated that introducing digital euro could occur within the next four years. The report expressed that if ECB authorities support utilising advanced Euro in cross-border payment, this will impact the euro international role.
The ECB will continue to monitor development and publish information on the international role of the Euro regularly report concluded.