- According to Cipollone, the availability of both physical and electronic currency would enhance Europe’s payment autonomy.
- To provide a regulated alternative to privately created stablecoins, the ECB is creating a digital euro backed by the state.
The ECB reaffirmed its determination to maintain physical and digital public money as the backbone of Europe’s financial system. This is despite the growing popularity of stablecoins and private digital currencies throughout the world.
Even as the European Central Bank moves forward with its digital Euro plan, Euro banknotes and coins will still have a place in the financial system, according to ECB Executive Board member Piero Cipollone’s blog post from Monday.
Banking on Fiat
According to Cipollone, the availability of both physical and electronic currency would enhance Europe’s payment autonomy. He also said that a digital euro will not replace banknotes and coins, but rather complement them.
Stablecoins are becoming more popular for both international and domestic transactions, and the ECB’s remarks come as the number of crypto payments continues to skyrocket. To provide a regulated alternative to privately created stablecoins, the ECB is creating a digital euro backed by the state.
Cipollone said on April 8 that a digital euro would make it more difficult for stablecoins denominated in other currencies to serve as a standard form of trade across Europe. He warned that the bank would miss out on possibilities and face dangers if a digital euro couldn’t be created.
He added:
“Cash is here to stay. As we move forward, euro area consumers will appreciate having banknotes, coins and digital euros in their wallets. All with legal tender status, accessible anytime and anywhere, and tailored to diverse payment preferences and scenarios.”
The digital currency movement is gaining steam, but Cipollone stressed that physical cash is still necessary, especially in emergency situations when internet connection is limited. The digital euro failed to pique the curiosity of Europeans, according to a March research by the ECB.
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