Bank of Portugal to create contact group to debate digital euro and cryptocurrencies

The Bank of Portugal (BdP) is to create a “contact group” to debate the cryptocurrencies phenomenon and the future issue of a digital euro.

The project is currently under discussion at the European Central Bank (ECB). The contact group will be small, and can only be accessed by “invited parties,” according to an administrator, Hélder Rosalino.
The group should be launched at the start of next year, at a time when a research phase is underway that will decide whether a digital euro should, or should not, be issued. Both banks and payment institutions have concerns “over the form that the ECB digital euro could take”.
Hélder Rosalino says that the BoP through this group “is testing the national market” for possible acceptance and opinion”.
“This will have impacts on retail and on a number of entities, and we want to involve payment systems operators in Portugal and the financial system so that we can sound them out and get their opinions and, in essence, to “enrich our vision about the impacts of this project and the way in which it should develop”, sad the BoP administrator on the sidelines of a interbank meeting where the topic was discussed.
As to the representatives of entities that would be involved, three Portuguese associations top the list: the Portuguese Banking Association (APB), the National Association of Electronic Currency and Payment Institutions, and the Portuguese Association of Blockchain and Cryptocurrencies. The administrator also said that the contact group should also include representatives from other sectors of the economy such as retail.
“If there are no delays, the ECB should decide to advance or not with the issue of a digital euro which would enable citizens to hold euros in a type of virtual wallet managed by the European Central Bank, making risk-free payments”, explained Maria Tereza Cavaco, a director of the BoP payment systems department in a speech at the meeting.
In July 2021, the European Central Bank confirmed that it is beginning a two-year investigation into the digital euro, with sights set on a 2026 launch. It is a bold step for the payments industry, and one that could open up exciting new opportunities within Europe.
While the issuance of central bank digital currencies remains largely in the hypothetical stage, over 85% of central banks are investigating it. The introduction of CBDCs now appears inevitable, and countries such as China and Sweden are in the trial stages of implementation. Giesecke+Devrient is working with several central banks on this – including a pilot project in Ghana.
The digital euro will play a role in safeguarding European sovereignty – in digital, monetary and economic terms. It will ensure autonomy over the financial flow within the European Union, making Europe independent from private players outside of the EU. Covid-19 has shown it is important that certain critical infrastructures – including payments – are provided by public local authorities.
Christine Lagarde, president of the ECB, has stated that while it is not necessarily a cause for concern that Europe is dominated by foreign payments service providers, an ‘increase in protectionist policies’ and the ‘evolving global context’ must be considered. ‘We have a responsibility to ensure that our citizens have a choice and cannot be excluded from the payments ecosystem due to the unilateral actions of others,’ she said.
The digital euro could be a great foundation for innovation. One of the main advantages is that it is a universal means of payment. It would provide all the benefits of cash for the digital world and could be used everywhere. This would be a true advantage for citizens.