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


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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.

Keywords: central bank digital currency; central banks; legal tender; money; payment systems

Document Type: Research Article

Affiliations: Legal Services Department, Banco de Portugal, Legal Services Department, 148 Rua do Comércio, Lisboa 1100-150

Publication date: December 1, 2020

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  • Journal of Payments Strategy & Systems publishes peer-reviewed articles and case studies analysing best practice, emerging issues and new thinking in how to develop a profitable, customer-focused payments strategy. It examines major issues facing the corporate, wholesale and retail payments industry from a business, risk and operational perspective.

    Edited by renowned payments expert Alec Nacamuli and guided by an eminent Editorial Board, each quarterly 100-page issue provides practical, detailed analysis of developments and trends in the payments business, regulation, new entrants and technologies and how to bring them all together to define your payments strategy, as well as actionable advice and ‘lessons learned’ from fellow professionals on how payment processing systems can be leveraged to maximise profitability, security and efficiency and minimise risk. It contains no advertising and no advertorial.

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