Central bank digital currencies (CBDC) will likely become legal tender in their home countries, officials from two European central banks said Tuesday (Nov. 9).
Speaking at a panel in Helsinki on CBDCs, European Central Bank executive board member Fabio Panetta said that it the “likely” outcome, according to Bloomberg News.
At the same event, Russian central bank governor Elvira Nabiullina underlined the urgency of “seamless conversion between forms of money,” saying it was “crucial for the trust of society in this money.”
The panelists said that making sure CBDCs become legally recognized payment methods along with banknotes and coins can give this an advantage over other electronic payment types. It can also help dampen concerns about CBDCs being rejected if consumers hang on to old-guard payment methods or go for newer options such as stablecoins.
“It would be quite awkward not to have legal-tender status for an additional instrument issued by a central bank,” Panetta said.
He added that the ECB will examine the issue over the next two years, cautioning that the digital currencies becoming legal tender is not a foregone conclusion.
China, which is set to become the first major global economy to launch its own digital currency, had planned for the digital yuan to become legal tender from the beginning of the project.
But speaking at the same conference Tuesday, the People’s Bank of China governor Yi Gang said that as long as consumers still need cash, the institute will continue to supply it.
Earlier Tuesday (Nov. 9), Yi also said the PBOC will make an effort to further link the digital yuan to the country’s popular mobile payment apps.
Yi said the bank will create a management model for the digital currency modeled after how cash and bank accounts are managed, while also improving on its privacy protections, anti-counterfeiting measures and efficiency.
The panelists comments come one day after the news that the Bank of France wants to investigate the specifics of a CBDC.
Read also: France Wants to Study CBDC for Wholesale Use
The bank says a CBDC could improve standards for securities settlements and minimize possible fragmenting from multiple private versions existing. It could also speed up cross-border payments and make them less expensive and more transparent, while also allowing more people to access them overall.