Introducing a digital euro
Upgrading money to the digital age
Just as the internet revolutionized the way we communicate, technology is radically challenging the way money could work in the future. Policymakers will soon have to make decisions on how to make the best out of those technologies. By introducing a public digital euro, the European Central Bank could provide a safer and more efficient alternative to bank money and cryptocurrencies.
Right now, people have little choice but to use private banks, aside from hoarding cash under a mattress. Few people are aware that the money in their bank accounts exist only as money on a computer screen, and is legally the property of their bank. The bank owes that money to people, but the money does not belong to them.
By contrast, physical cash (banknotes and coins) is the only form of money that is actually created by national central banks and that is not attached to a particular debt from a bank to individuals. When the central bank issues cash, this also creates an income for governments – known as seigniorage. In addition, cash is the only payment system that is entirely free of charge, and accessible to everyone, including those who don’t have a bank account. In fact, coins and banknotes are a valuable public utility service.
Why does the future of cash matter?
From contactless cards to mobile apps and cryptocurrencies, today’s digital technology is everywhere and enables us to make user-friendly payments. With the increase in financial technology, there is a risk that cash will disappear. If that happens, this would mean that the entire money and payment system would be left in the hands of a few increasingly powerful private financial companies. We would leave those companies with even more power to monitor what we pay for and who we exchange with.
Not to mention, without the ability to withdraw cash, there is no way to opt out from the current banking system. Money is a public good. Technology can allow us to redesign our monetary system so it works in the public interest.
Public digital currency – Making the euro citizen-friendly
Positive Money Europe advocates for the introduction of a public digital currency system in the Eurozone. With such a system, the ECB would essentially allow citizens to store their money at the central bank and make all sorts of basic payments and transactions with it. In essence, a public digital currency has the same properties as cash (free of charge and non-debt based) on a digital format.
The digital euro would not replace physical cash, and we believe your ability to use notes and coins should be protected.
The digital euro system would interact with the privately run banking system, meaning that people could move their money out of their commercial bank accounts to their digital euro account and vice-versa. A “digital cash” system would remove a need for the Government to bail out “too big to fail” banks, because money stored at the central bank would be risk-free. This system could make deposit insurance schemes less necessary.
Public digital currencies would remove the banking system’s privileged access to central bank money. By allowing people to use central bank money as well, it would reduce the concentration of economic power in a few large institutions. Because people would have more freedom with their money and less implicit public subsidies, it would force the banking system to be more ethically responsible and competitive.
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Latest news on digital euro
Contrary to what Emmanuel Macron says, “magic money” exists in the form of quantitative easing and credit creation.read more
Czech Central Banker says helicopter money is “a real and viable possibility” whose implementation would be facilitated by the introduction of a public digital currency.read more
The European Parliament passed a preliminary version of its annual report on the European Central Bank, which includes a number of criticisms and proposals that the QE for People campaign has made.read more
Why should we introduce a digital euro?
Money as a Commons
A digital euro would ensure we don’t lose the public utility of cash as a public payment system.
Safety of Payments Systems
Instead of relying on intermediaries such as banks and clearing houses, money transfers and payments could be made in real time, directly from the payer to the payee
Improve Monetary Policy
A digital euro scheme could constitute a new channel for monetary policy transmission and facilitate the implementation of helicopter money.
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