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Digital euro package

Briefing 18-09-2023

A digital euro can be understood as central bank money offered in digital form for citizens and businesses to be used for their retail payments. It would be a central bank digital currency (CBDC) –an electronic equivalent to cash, complementing banknotes and coins – and the central motivation to develop a CBDC can be explained by the increasing digitalisation of financial services. Banknotes and coins, currently the only public money, are considered the ultimate anchor of the financial system. However ...

Public or Private? The Future of Money

Analiżi fil-Fond 15-11-2019

Stablecoins issued by large tech companies pose a significant challenge for traditional fiat money. In this study, we highlight the importance of a public-private-cooperation in dealing with this topic, where central banks closely work with stablecoin issuers in issuing synthetic central bank digital currency (sCBDC). This framework minimizes the risks of private money and utilises the technological advantages of stablecoin issuers. This document was provided by Policy Department A at the request ...

Cryptocurrencies and monetary policy

Analiżi fil-Fond 16-07-2018

Decentralised ledger technology has enabled cryptocurrencies to become a new form of money that is privately-issued, digital and that permits peer-to-peer transactions. However, the current volume of transactions in such cryptocurrencies is still too small to make them serious contenders to replace official currencies. Underlying this are two factors. First, cryptocurrencies do not perform the role of money well, because their value is very volatile and they are thus not very good stores of value ...

Speculation on Bitcoin, the evolution of money in the digital age, and the underlying blockchain technology are attracting growing interest. In the context of the Eurosystem, this briefing paper analyses the legal nature of privately issued virtual currencies (VCs), the implications of VCs for central bank’s monetary policy and monopoly of note issue, and the risks for the financial system at large. The paper also considers some of the proposals concerning central bank issued virtual currencies. ...

More and more regulators are worrying about criminals who are increasingly using cryptocurrencies for illegitimate activities like money laundering, terrorist financing and tax evasion. The problem is significant: even though the full scale of misuse of virtual currencies is unknown, its market value has been reported to exceed EUR 7 billion worldwide. This paper prepared by Policy Department A elaborates on this phenomenon from a legal perspective, focusing on the use of cryptocurrencies for financial ...

Virtual Currencies

Analiżi fil-Fond 02-07-2018

Following a brief discussion of the characteristics of money, we provide an overview of virtual currencies describing relevant technological aspects and different use cases. Based on this, we derive implications for financial market regulations and monetary policy (with a focus on the possibility of central bank digital currencies). This document was provided by Policy Department A at the request of the Economic and Monetary Affairs Committee.

Virtual currencies have generated much discussion over the past few years with some believing they are an improvement on state-issued currencies and will end up replacing them. This paper argues this is extremely unlikely. Cryptocurrencies such as Bitcoin do not work well as money because of security weaknesses and the volatility of their price relative to traditional currencies. The theory that the private sector will choose to replace a state-backed currency with privately-issued currency also ...

Virtual currencies are a contemporary form of private money. Thanks to their technological properties, their global transaction networks are relatively safe, transparent, and fast. This gives them good prospects for further development. However, they remain unlikely to challenge the dominant position of sovereign currencies and central banks, especially those in major currency areas. As with other innovations, virtual currencies pose a challenge to financial regulators, in particular because of their ...

Blockchain technology is of increasing interest to citizens, businesses and legislators across the European Union. This report is aimed at providing a point of entry for those curious about blockchain technology, so as to stimulate interest and provoke discussion around its potential impact. A general introduction is followed by a closer look at eight areas in which blockchain has been described as having a substantial potential impact. For each of these, an explanation is given of how the technology ...

Since March 2015, the ECB is engaged in an expanded asset purchase programme of private sector assets and sovereign bonds (so called quantitative easing or QE), which has been recently extended until December 2017, although at a slower pace. The aim of the programme is to ease monetary and financial conditions, making access to finance cheaper for firms and households. This tends to support investment and consumption and, ultimately, contributes to a return of inflation rates towards the ECB target ...