ECB’s Nagel: Digital Euro Fit for an Era of Geopolitical Tensions

24 June 2024

By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Monday said that the digital euro would make Europe more self-reliant amid increasing geopolitical risks.

In a panel discussion at the German-Italian Centre for the European Dialogue in Rome, Nagel, who heads the German Bundesbank, said, according to a text provided, ‘As things stand now, our digital payments often rely on non-European companies. In contrast, the digital euro would be built exclusively on European infrastructure. Accordingly, the digital euro would strengthen the strategic autonomy of Europe and increase our resilience.’

For this reason, more than from offering a response to an increasingly digitalised economy, the digital euro also ‘fits well into an era of geopolitical tensions’, he said.

Recent research conducted by the Bundesbank suggested that the digital euro might reduce financial stability risks, he said.

‘[T]he digital euro would also act as an alternative to bank deposits during normal times free from financial distress’, he said. ‘Fewer liabilities in the form of deposits mean a less leveraged banking system. And a less leveraged banking system is more stable, which would reduce the risk of a bank run in normal times.’

The digital euro would serve as complementary solution to cash, rather than a replacement for it, he said.

‘Creating the digital euro is about expanding consumers’ choice when it comes to means of payment, not shrinking it’, he said.