ECB warns of 'risks to stability' if central banks don’t offer digital currencies

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The European Central Bank (ECB) published a report about the international role of the euro Wednesday, touching upon the importance of central bank digital currencies (CBDCs) for future financial strength. 

The authors of the CBDC portion of the report were economist Massimo Ferrari and international economist Arnaud Mehl, both affiliated with the ECB. 

They stated that "attention should be paid to the risks to stability that might arise if a central bank does not offer a digital currency," adding that "issuing a CBDC would help to maintain the autonomy of domestic payment systems and the international use of a currency in a digital world."

The ECB, and particularly its president Christine Lagarde, has been receptive toward the idea of the digital euro as a complement to physical cash — even if opposed to bitcoin and other digital assets like stablecoins. Lagarde’s prior comments regarding the digital euro had been vague and tepid at best, shaped by the need for more research and testing. 

While the ECB is still figuring out the infrastructure behind the digital euro, these comments coming out of the ECB report appear to be the most positive and bullish toward the broad benefits of implementing a CBDC to date.

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