According to officials studying such initiatives, digital currencies employed by major central banks will probably become legal tender in their jurisdictions.
This result is “likely” in the euro area, European Central Bank executive board member Fabio Panetta told a panel on central bank digital currencies, or CBDCs, in Helsinki on Tuesday.
Addressing the same event, Elvira Nabiullina, the governor of the Russian central bank, agreed. He emphasized the importance of “seamless conversion between forms of money”, calling it “critical to society’s belief in this money”.
Ensuring that CBDCs are legally recognized as a form of payment with banknotes and coins could give the new form of money an edge over other forms of electronic payments.
It could also help allay fears of CBDCs if consumers stick to existing payment methods such as credit cards and apps, or adopt new alternatives such as stablecoins.
“It would be quite strange for an additional instrument issued by a central bank not to have legal-tender status,” Panetta said. The ECB will investigate the matter over the next two years, although he warned that the status “should” be achieved. should not be taken lightly.”
In China, which will likely be the first major economy to launch a CBDC, plans for the digital yuan have been designed to be legal tender from the very beginning.
Also speaking in Helsinki, Governor Yi Gang said that as long as cash is needed, the People’s Bank of China will not stop its supply or use administrative orders to replace it.
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