A digital euro and the future of cash

Hannes Hermanky () and Martin Summer
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Hannes Hermanky: Oesterreichische Nationalbank (OeNB)

Monetary Policy & the Economy, 2022, issue Q1-Q2/22, 91-108

Abstract: What is the discussion about a digital euro – and, more generally, digital central bank currencies– all about? We are focusing here on the future of cash. For strategic reasons, central banks are seeking to provide a credible and viable public anchor for digital money given that the future might be shaped more strongly by new private issuers of money. The technological structures and business model-driven incentives of the new players, which are associated with the internet economy and thrive on network effects, might lead to a concentration of significant market power in payments. Ultimately, this might even result in a fragmented monetary system and jeopardize universal access to public money. From a central bank’s perspective, the crucial question is therefore not so much about replacing cash with new payment technologies but about finding ways to ensure that the monetary system will continue to work in the public interest in a digital future. Cash will, and should, play a role also in a future monetary system. By creating a digital euro, central banks in the euro area aim to adapt cash in such a way that it meets the needs of the digital age.

Keywords: central bank digital currency; digital transformation of money and finance; payment economics (search for similar items in EconPapers)
JEL-codes: E42 E52 E58 G21 (search for similar items in EconPapers)
Date: 2022
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