The European Central Bank (ECB) has considered using a public digital currency if international payments inside of Europe stayed too expensive.
Reuters reviewed a confidential document by the ECB that said adoption of a potential public cryptocurrency could be sped up if there are signs that people are using cash less than usual.
The possible digital currency would be ECB-backed and it would have “far-reaching implications” in terms of how money is handled at banks, and the policies that govern it. Because of that, the document said, it’s important that the potential introduction of a cryptocurrency be examined carefully, and it is not something that should be rushed.
There will be a meeting on Thursday (Dec. 4) where the document will be presented to European Union finance ministers.
A public digital currency would provide an alternative to Facebook’s planned cryptocurrency Libra as well as other private cryptocurrency endeavors, while cutting international transaction costs.
Last month, French Finance Minister Bruno Le Maire said, “The fact that it is for the long term does not prevent us from working and having results next year.”
And an ECB official said the central bank of the eurozone is already at work on the technical aspects of a cryptocurrency, and would offer conclusions to EU governments soon. Several options are reportedly under study, with users of a new digital coin able to open bank accounts directly at the ECB being the most ambitious idea.
That version would reduce transaction costs, but it would make existing banks and well as payment services mostly redundant. Banks could be provided with tokens or electronic cash in a less radical idea, according to an official cited in the report. Work is still underway, however, and multiple legal and technical hurdles remain.
Facebook’s Libra has been scrutinized heavily by regulators and lawmakers alike, but it has stoked conversations about cryptocurrency and its potential uses in the financial sector.