ECB’s Weidmann wants digital euro to start small

FILE PHOTO: FILE PHOTO: German Bundesbank President Jens Weidmann presents the annual 2018 report in Frankfurt
FILE PHOTO: FILE PHOTO: German Bundesbank President Jens Weidmann presents the annual 2018 report in Frankfurt, Germany, February 27, 2019. REUTERS/Kai Pfaffenbach/File Photo/File Photo

September 14, 2021

FRANKFURT (Reuters) – A digital euro, currently under design by the European Central Bank, should have a limited role initially as it could disrupt the bank sector and overly extend the role of central banking, Bundesbank President Jens Weidmann said on Tuesday.

“A gradual approach might make sense given the risks involved – that means a digital euro with a specific set of features and the option to add further functionalities later,” Weidmann told a conference.

The ECB gave the digital euro a green light earlier this summer but the actual launch of the currency could still be around five years away.

Among his key concerns, Weidmann argued that in times of crisis, consumers could rush to convert their bank deposits to central bank money, destabilising the financial system as they withdraw a key source of funding.

(Reporting by Balazs Koranyi; Editing by Francesco Canepa)