ECB Paper marks success factors for CBDCs, Digital Euro
A paper published by the European Central Bank (ECB) discusses various conditions for successful implementation of central bank digital currencies (CBDCs) such as the eurozone’s own digital euro. The authors also point to different risks that such projects entail, like the danger of crowding out the private sector.
In order to create a successful CBDC, a monetary authority needs to establish the digital currency as a widespread means of payment and exchange that also has a sufficient store of value function, according to the paper released by the European Central Bank. At the same time, central banks need to ensure that currencies like the digital euro do not turn into a significant means of investment, crowd out private payment solutions, or undermine the banking sector’s intermediation role.
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