MNI BRIEF: Lack of Digital Euro May Pose Stability Risk - ECB

A digital currency issued by the European Central Bank would not have the effect of abolishing cash, lead to lower interest rates or displace banking intermediation, ECB Executive Board Member Fabio Panetta and Director General Market Infrastructure and Payments Ulrich Bindseil argue in a blog post published Thursday.

Instead, "more attention should be paid to the stability risks if the ECB does not offer a digital currency," they write, citing a desire to prevent European payments becoming dominated by the non-European providers, including foreign tech companies offering artificial currencies.

Such scenarios "are not around the corner," Panetta and Bindseil continue, but could threaten the stability of the financial system if a small number of dominant providers gain strong market power, in remarks that echo Frank Elderson's recent description of crypto-assets as volatile and lacking both intrinsic value and reliable institutional backing.