The Digital Euro and Energy Considerations: Can the ECB Introduce the Digital Euro Considering the Potential Energy Requirements?

Abstract

The ECB has two mandates its primary and secondary mandate. Its primary mandate has been the focus of many discussions but its secondary mandate is less frequently discussed. Nevertheless this mandate has important objectives and should not be considered obsolete. This article examines the legal status of the secondary mandate of the ECB with regard to climate change. In particular this article will consider the role of the secondary mandate with regard to the Digital Euro and energy targets. The Digital Euro can be used as a monetary tool and improve payment systems. However, depending on its design the Digital Euro can use a considerable amount of energy. This article concludes that if the design of the Digital Euro does not impact the monetary objectives, the secondary mandate of the ECB determines the design of the Digital Euro.

The rise in popularity of central bank digital currencies. A systematic review

“…Other articles strictly focus on new money [ 119 , 120 ], CBDCs as new financial instruments [ 121 ], the digital Euro [ 122 ] or various cryptocurrencies and the sustainability-related ecosystem around them [ [123] , [124] , [125] , [126] , [127] ]. By constructing an overview of how modern money is created and combining contemporary heterodox theories and the most recent empirical data, it is suggested that a greater institutional understanding of modern money processes might be useful for enhancing our ability to consider how money generation might more effectively address the needs of the current social and environmental system.…”

“…The ECB's primary objective has been discussed intensively. The secondary objectives include the development of the Digital Euro as well as the energy sustainability of the bank [ 122 ].…”