No plan to issue central bank digital currency, says ECB President Mario Draghi

The European Central Bank (ECB) does not intend to issue central bank-backed digital currency (CBDC), the ECB president Mario Draghi said last week.

Draghi attributed the reasons behind this decision to the underlying blockchain technology being still fragile and high use of physical cash in the common currency area, Reuters reported.

A number of central banks have been looking into the possibility of issuing CBDCs. Earlier this year, the Bank of England (BoE), which embarked on a multi-year research programme to explore the implications of CBDCs back in 2016, published a working paper on the design principles and balance sheet implications of CBDCs.

In May, Norges Bank published a paper on CBDCs prepared by a working group set up by the central bank. The paper explored whether Norges Bank should issue CBDC and provides an overview of aspects that should be given weight in this consideration.

The following month, the Bank of Thailand announced a new project aimed at developing central bank digital currency (CBDC) to facilitate interbank settlement.

Sweden’s Riksbank is also exploring its own digital currency “e-krona” in response to the fast decline in the use of cash in the country.

Despite these efforts by global counterparts, Draghi believes that the time is not ripe for such a change in the eurozone.

“The ECB and the Eurosystem currently have no plans to issue a central bank digital currency,” he said in a letter to a member of the European Parliament, adding that technologies such as distributed ledgers “require substantial further development” and that he saw no “concrete need” to issue a digital euro.