The European Central Bank may launch a digital euro in the next four years.
A conference on plans for a digital euro was held at the National College of Ireland in Dublin and was addressed by Dr Fabio Panetta, a member of the Executive Board of the ECB.
In October 2021, the ECB launched a two-year investigation to explore the possibility of launching a digital euro.
"At the end of 2023 we could decide to start a realisation phase to develop and test the appropriate technical solutions and business arrangements necessary to provide a digital euro," Dr Panetta said.
"This phase could take three years," he added.
The ECB believes that the increasing popularity of non-cash payments and the expansion of crypto-assets reveal a growing demand for immediacy and digitalisation.
"If the official sector, central banks and supervised intermediaries, do not satisfy this demand, others will," said Dr Panetta.
The ECB said a digital euro would aim to offer a means of payment that is free, available for all digital payments and accessible to everyone, everywhere at a time when the vast reduction in the number of bank branches may be affecting vulnerable customers.
The ECB says that digital money issued by a central bank would serve as an instrument to accompany the digital transitions in payments that are already underway.
"This transition is particularly visible here in Ireland, where the financial landscape is undergoing drastic change, with some major incumbent banks withdrawing and fintechs making rapid inroads into the payments market," Dr Panetta said.
"A digital euro would bring important benefits in this context. It would level the playing field by allowing intermediaries - including small ones, which are typically less able to keep pace with innovation - to offer more technologically advanced products at a competitive price," he said.
Nine countries around the world have now fully launched a digital currency and some large economies, like China, are advanced in their exploration.
At today's conference, Dr Panetta also made reference to the recent volatility in the cryptocurrency market.
"Recent developments in the market for crypto-assets illustrate that it is an illusion to believe that private instruments can act as money when they cannot be converted at par into public money at all times," he said.
"Despite claims that cryptos are a trustworthy form of "currency" free from public control, they are too risky to act as a reliable means of payment," he said.
"They behave more like speculative assets and raise multiple public policy and financial stability concerns. Anyone investing in cryptos must be prepared to lose all their investment," he cautioned.