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Digital currencies planned by major central banks will probably become legal tender in their jurisdictions, according to officials studying such initiatives. That outcome is “likely” in the euro area, European Central Bank Executive Board member Fabio Panetta told a panel in Helsinki on central bank digital currencies (CBDCs).
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Addressing the same event, Russian central bank Governor Elvira Nabiullina concurred. She stressed the importance of “seamless conversion between forms of money”.
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Ensuring CBDCs are legally recognised as a form of payment alongside banknotes and coins could give the new form of money an edge over other types of electronic payments.
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It could also help allay fears of CBDCs being shunned if consumers stick with existing payment methods like credit cards and apps, or embrace newer options like stablecoins.
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“It would be quite awkward not to have legal-tender status for an additional instrument issued by a central bank,” Panetta said. The ECB will examine the matter over the next two years, he said.
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In China, which will probably be the first major economy to launch a CBDC, plans for the digital yuan foresaw it being designed as legal tender from the outset. Yi Gang of China said that as long as there's a need for cash, its central bank won't stop supplying it or use administrative orders to replace it.
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Singapore looks at digital dollar for retail
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Singapore's central bank is starting a project — Code-named “Project Orchid” — on the technological aspects of building a digital form of its currency to prepare for the days if the city-state decides to have one, its chief said.
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