ECB’s Panetta Says CBDCs ‘Likely’ to Be Legal Tender: Report

Central bank digital currencies (CBDCs) will probably become legal tender in the jurisdictions of their issuance, the European Central Bank’s (ECB) Fabio Panetta said.

• Panetta, a member of the ECB’s executive board, said this was “likely” at a panel in Helsinki on Tuesday, according to a Bloomberg report. However, this status “should not be taken for granted,” he added.

• CBDCs being legal tender would give them an edge over other payment options provided by private companies and help achieve wider use by the public.

• “It would be quite awkward not to have legal-tender status for an additional instrument issued by a central bank,” Panetta said.

• Other considerations include interaction with the European retail payments market, design choices, use cases and what front and back-end technical infrastructure could best handle these issues.

• The ECB has been discussing a CBDC since the start of the year and said in July it was commencing an investigative phase that would last 24 months.