A report by the European Central Bank (ECB) entitled “The international role of the euro” highlighted the threat to countries that decide not to adopt central bank digital currency (CBDC).

Domestic and cross-border payments can be dominated by foreign providers report was announced on Wednesday.

The report provides an example of “foreign tech giants able to provide artificial money,” similar to Facebook’s (formerly Libra) Diem project, which when announced in 2019, shocked the financial world.

Dominance of such privately issued currency would leave consumers and businesses vulnerable if it jeopardized the stability of the financial system.

“The issuance of a CBDC will help maintain the autonomy of domestic payment systems and the use of international currencies in the digital world,” the report concludes.

The CBDC will also improve the global standing of the currency to which it is pegged when introduced in countries with volatile currencies. This would also “reduce the monetary policy autonomy in the affected economies,” the report said.

The European Commission and the ECB have been discussing the possibility of introducing a digital euro since early 2021, with Central Bank President Christine Lagarde saying in March that a digital euro could be introduced within four years if the decision is made.

Annie

According to Coindesk

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