An analysis of the legal impact of central bank digital currency on the European payments landscape

Abstract

This paper considers the legal impact of a central bank digital currency (CBDC) on the European payments landscape. It opens with a discussion about the concept of money, its functions and the underlying theories. The analysis then discusses the concept of CBDCs and the various types of CBDC that are currently being advanced. The paper questions whether adoption of a pan-European CBDC would require a harmonised approach, or whether national solutions alone could suffice. The paper describes the legal aspects of the European payments landscape that would need to be adjusted in order to settle CBDC transactions without posing risks to payment system participants. The paper concludes by suggesting that this new form of money could broaden the discussions surrounding the institutional theory of money, and that a more cautious approach to the subject would be more likely to incline the European legislator to consider amendments to the Treaty on the Functioning of the European Union and the Statute of the European System of Central Banks, should any decision be taken to embrace a CBDC.