The European Central Bank (ECB), which works on the implementation of the digital euro accented by the monetary plans of US President Donald Trump with cryptoactive, believes that the implementation of this digital currency will entail the withdrawal of 5 out of every 10 euros in circulation.
This is the main conclusion of Latest Organism Reportwhich, unlike other central banks, such as the US Federal Reserve (Fed), has been working for years to implement this means of payment.
The Fed has already promised not to develop a digital dollar after President Trump signed an executive order that promotes cryptocurrencies and with which he seeks to make the country Regarding digital assetswhile prohibiting the establishment of a digital currency of the Central Bank (CBDC, in English).
The ECB is on another way, as the member of the Piero Cipollone Executive Committee has highlighted this week, which defends the project as a matter of strategic sovereignty and raises the digital euro as a new monetary liability, in addition to the tickets and reserves of commercial banks, which It would not have to increase the balance of the central banks.
The effects of the emission of digital currencies will depend not only on how they are designed, but also that they are Attractive for consumersfor which central banks must work on remuneration, tenure limits or access criteria.
The net impact of digitalization in the size of the balances, the report indicates, could also be negative, since the number of tickets in circulation could decrease and the design characteristics of the CBDC (they are the acronym in English of Central Bank Digital Currency, which, which It is translated as Banco Centra digital currencyl, the digital euro in the case of the euro zone), could limit its adoption as a value reserve.
This implies that the balance would not be modified, but that it would be rather a “replace ACTIVES OF THE ECB BALANCE FOR OTHER WAYS.
The real amount of CBDC in circulation in the euro area will be determined by household demandlike this determines the amount of tickets in circulation.
With this premise, The ECB estimates that of every 10 digital euros that are issued will be withdrawn from the circulation 5 euros physical and bank deposits would lose 3.
The ECB has taken into account three possible scenarios, depending on whether the demand is low, Medium or high: in the first case, the fall of bills would be 15,000 million; in the second, of 125,000; and in the third, of 256,000.
The calculation of the ECB also includes coins, which are quantitatively much less relevant than tickets. In December 2023, There were 1,567,200 million euros in tickets and 33,500 million euros in coins called in euros in circulation, according to the statistics of the agency itself.
False digital euros?
Among the main risks of the adoption of the digital euro are reputational and those derived from the dependence of the new currency of insfrastructure and facilities very susceptible to cyber attacks.
In this regard, the report recalls that the Bank of International Payments has launched the “Polaris Project” To support the central banks in the design, implementation and operation of Insurance and Resilient CBDC systems, to “mitigate the operational, legal and reputational risks they face due to cyber -cyber threats or operational failures.”
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