THE ECB AND € E‐BANKNOTES – Could the ECB Issue an Electronic Equivalent of Paper-Based Euro Banknotes? Under Which Conditions Might Such ʹelectronic Banknotesʹ Have Legal Tender Status? Study Prepared Under the 2020 ECB Legal Research Programme 2020 (Topic 2)

125 Pages Posted: 20 Aug 2020

See all articles by Corinne Zellweger-Gutknecht

Corinne Zellweger-Gutknecht

University of Basel

Benjamin Geva

York University - Osgoode Hall Law School

Seraina N. Grunewald

Radboud University Nijmegen

Date Written: July 31, 2020

Abstract

This research paper examines whether the European Central Bank (ECB) is entitled de lege lata to issue an electronic equivalent of paper‐based euro banknotes (e‐banknotes) and, if so, under what conditions such e‐banknotes might have legal tender status. To this end, Part 2 sets the stage by discussing the reasons that might motivate or even compel the ECB to issue an e-banknote and by analyzing whether an e‐banknote is a banknote by reference to general principles of law and financial practices. Part 3 examines which monetary policy objectives and tasks could be better fulfilled if an e‐euro were issued or, conversely, whether non‐issuance could in the future impair the fulfillment of the ECB’s mandate. Subsequently, Part 4 analyses the constitutional framework that empowers the ECB, within certain clear limits, to pursue the objectives set. This includes particularly the interpretation of the term ‘banknotes’ in Article 128 TFEU as well as the content and scope of selected basic tasks set out in Article 127 TFEU and mirrored in the Statute of the European System of Central Banks (ESCB) and of the ECB. The results are then weighed against the potential interests of third parties that could be affected by an e‐euro. Part 5 proceeds by discussing the design features that a functional equivalent of a paper banknote can and must exhibit in order to meet the previously defined objectives and constitutional limits. Part 6 explores the issue of architecture, i.e. the possible models of issuance. Part 7 concludes.

Keywords: ECB; E-Banknotes; Retail CBDC; rCBDC; Legal Tender; ECB’s Mandate, Objectives and Tasks; Issuance of Cash; Monetary Policy; Payment Systems; Financial Stability; Constitutional Framework; Article 128 TFEU; Basic Tasks; Article 127 TFEU

Suggested Citation

Zellweger-Gutknecht, Corinne and Geva, Benjamin and Grunewald, Seraina, THE ECB AND € E‐BANKNOTES – Could the ECB Issue an Electronic Equivalent of Paper-Based Euro Banknotes? Under Which Conditions Might Such ʹelectronic Banknotesʹ Have Legal Tender Status? Study Prepared Under the 2020 ECB Legal Research Programme 2020 (Topic 2) (July 31, 2020). Available at SSRN: https://ssrn.com/abstract=3667057 or http://dx.doi.org/10.2139/ssrn.3667057

Corinne Zellweger-Gutknecht (Contact Author)

University of Basel ( email )

Peter-Merian-Weg 8
Basel, CH-4003
Switzerland

Benjamin Geva

York University - Osgoode Hall Law School ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
416 736 5045 (Phone)
416 736 5736 (Fax)

HOME PAGE: https://www.osgoode.yorku.ca/faculty-and-staff/geva-benjamin/

Seraina Grunewald

Radboud University Nijmegen ( email )

Postbus 9108
Nijmegen, 6500 HK
Netherlands

HOME PAGE: http://https://www.ru.nl/english/people/grunewald-s/

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