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The European Central Bank (ECB) is interested in possibly issuing a central bank digital currency (CBDC), and its decision will be announced in April. If the ECB were to go ahead, economists at HSBC believe there should not be any impact on the euro.

See: e-CNY is unlikely to have exchange rate implications over the near-term – HSBC

Key quotes

“The ECB is interested in possibly issuing a CBDC after it ended a public consultation on 12 January 2021 and a decision whether to proceed will be announced in April. The initial aim would be to compliment cash within the eurozone for domestic residents – households and firms. So, this should not have any impact on the EUR.”

“The ECB said in a report about the digital euro that ‘it should potentially be accessible outside of the euro area in a way that is consistent with the objectives of the Eurosystem and convenient to non-euro area residents.’ Otherwise, the ECB said the international role of the EUR could weaken at the expense of other CBDCs.”

“The ECB believes the international role of the EUR is stable but its composite measure also shows that this has been weakening for more than the past decade. The idea of a digital EUR will likely gain more attention going forward. However, technology alone will not be enough to improve the EUR’s international role.”

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