Talking today at Consensus Distributed, European Central Bank (ECB) board member Yves Mersch spoke about the potential for a central bank digital currency (CBDC). The message was that the bank is carefully exploring a digital euro, but there is no demand right now. There was an interesting question about whether the ECB has the exclusive right to issue a digital currency.
“The lack of an imminent, what I would call, business case for a central bank digital currency should, and indeed does not stop us from seriously exploring the optimal design of a central bank digital currency, so that we will be well prepared should we ever have to take a policy decision to issue a digital currency,” said Mersch.
He said that across Europe, 76% of retail transactions still use cash, but acknowledged there were exceptions in some countries where cash usage was declining. However, across Europe, the growth in demand for cash outstrips GDP growth. Any move to digital cash would have to be driven by citizen demand, and the ECB does not see it yet.
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