The European Central Bank needs to issue a digital euro because ceding space entirely to private sector-initiated initiatives such as stablecoins could jeopardize financial stability and weaken the role of central banks, said ECB Executive Committee member Fabio Panetta. The ECB has been working on designing a digital currency that would be issued directly by the central bank like cash, but the project could still take about five years to launch a real currency. Just as stamps lost much of their usefulness with the advent of the Internet and e-mail, cash could lose its relevance in an increasingly digital economy, and if that becomes a reality, it would undermine the effectiveness of central bank money as a monetary anchor," Panetta said. History shows that financial stability and public trust in money require public and private currencies to be widely used together. To that end, the digital euro must be designed to make it attractive for widespread use as a means of payment, but at the same time prevent it from becoming successful as a way to preserve value, resulting in a run on private currency and increasing the risk to bank operations."
