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ECB's Weidmann wants digital euro to start small

ECB's Weidmann wants digital euro to start small
ECB's Weidmann wants digital euro to start small   -   Copyright  Thomson Reuters 2021
By Reuters

FRANKFURT – 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.