The ECB said a digital euro could increase the euro’s appeal, though the health and size of the euro zone’s economy were more important.
Opening a digital euro to foreigners would also come with risks, however, such as opening a gateway for money laundering or facilitating runs on weaker currencies at times of crisis.
The ECB said these could be addressed in the design of the digital currency, for example by setting a cap on how much each citizen can own or forcing disclosure.
“Transparency or selective privacy would enable better compliance and know-your-customer checks to be implemented, thereby controlling illicit payment flows, for instance for large transactions,” the ECB said.
“These safeguards would strengthen the reputation and credibility of the digital euro.”
The ECB hasn’t officially decided whether or not it would introduce a digital euro and no launch is expected to take place before four or five years.
(Reporting by Francesco Canepa; Editing by Chizu Nomiyama)