The currency war primarily evokes competitive devaluations. Another currency war is looming, the one between public (or official) currencies and private currencies, whose stakes, which are eminently political, relate to power and sovereignty. Because “money is power” as Roy Harrod said, and not only purchasing power

The success of bitcoin illustrates the rise of cryptocurrencies, privately initiated digital currencies, with unstable prices for many of them, and without central banks able to serve as “lender of last resort” in the event of a hit. Of course, bitcoin and other cryptocurrencies do not fulfill all the functions of a complete currency, but they still compete with official currencies for certain uses. The announced arrival of Facebook in 2021 with its Libra currency, renamed Diem, would give a huge boost to the rise of private cryptocurrencies since the American giant has

Faced with the privatization of money, which takes us far back in history, the authorities are not left behind. Central banks want to take back control; they are working on the launch of public digital currencies. The ECB is on this line over the next five years. Central banks are simply implementing, each within its sphere of control, the new digital technologies.

The digital euro will complement cash, replacing it in part. Everywhere, the share of cash in total payment methods is decreasing, with successive waves of technological innovations. However, some current transactions will continue to be done in cash for reasons of habit and convenience, not to mention that the informal economy, present here and there, works with cash.

The digital euro will be traded at 1:1 parity against all other forms of the euro. It will therefore be a “stable coin”, just as the Diem is intended to be a “stable coin” against the dollar. This property will avoid the volatility that is inherent in many cryptocurrencies

For everyone, businesses and households as well as financial institutions, the digital euro will reduce transaction costs, speed up and secure settlements, and potentially increase the speed of currency circulation. Digital technology broadens the field of possibilities, at the same time as it lends itself to cyberattacks

With central bank digital currencies, the relationship between public and private currencies will become essential. Private cryptocurrencies are delivered for their price under the constant influence of the law of supply and demand. What should be called the “bitcoin madness” illustrates this at the moment. By definition, the digital euro will have the ECB as a guarantor of its stability and liquidity

Public and private digital currencies will be competing. At the end of the day, the primacy of what defines the quality of a currency: the stability of its value, the depth of the financial markets on which it is based, and of course its available quantity. But public and private digital currencies will also be complementary. Convertibility between them, in both directions and with numerous crossing points, will be crucial information for the fight against tax evasion, money laundering and terrorist financing