With cash losing popularity as the main means of payment, European central banks are flouting the idea of issuing digital currencies. The Bank of Lithuania, which has already issued the world's first digital collector coin, is among European institutions looking into the need and possibility of digitising the euro, according to a press release by ROCKIT.
Discussions around central bank digital currencies (CBDC) have gained momentum with the surge of crypto assets, such as bitcoin. But these do not have the status of legal tender in any country, they lack regulations and stability.
However, the Eurosystem, including the Bank of Lithuania, started preparations to issue the digital euro, if the need emerges. In Autumn 2020 it issued a report and launched public consultations and practical experiments with digital currency.
Read more: Bank of Lithuania to issue world's first digital collector coin
The digital euro could appear within the next five years, said Austėja Šostakaitė, a market infrastructure expert at the European Central Bank.
She and other experts discussed the possibilities at the Upgrading Money to the Digital Age: Introducing Digital Euro event, organised by ROCKIT, a Fintech hub.
The digital euro would not replace cash, but could be rolled out as an alternative for domestic and international payments that would be faster, safer and more efficient, according to her.
Sweden, where the decline of cash started back in the 1950s, has also been toying with the idea and has already introduced the e-krona, said Carl Andreas Claussen, a senior adviser at Sveriges Riksbank.
“We started looking at this back in 2017. It was a new thing at that time, we had a hype about Bitcoin, so we started thinking that cash seems to be disappearing in Sweden, and maybe we need to issue some modern digital form of the Swedish currency. We started with brainstorming, trying to find out how e-krona should be, what the benefits are, what the risks are,” he said.
In Lithuania, however, people are much more attached to cash and might be reluctant to switch to cashless payments, Šostakaitė agreed.
“We’re looking into how we can provide digital money to less tech-savvy people. We would ensure that everyone has access to it. And there will be a lot of work done, knowing how people feel and what different groups think about a digital euro,” she said.
“European national central banks and the EU parliament make sure we’re not talking about displacing physical cash, it’s about facilitating an alternative for use in the digital economy,” said Marius Jurgilas, a board member at the Bank of Lithuania. “We’ll ensure that cash is available if there’s a demand for it.”
The other challenge is regulation. The currently used methods are still focused on physical cash and electronic payments, while the existing crypto assets have shown the challenges of regulating and controlling digital currencies.
Read more: Lithuanian government sells confiscated cryptocurrency for €6.4m
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