1. The Target for the Digital Euro is 2026
2. New Cash Handout for Households in Japan
3. Morgan Stanley: Fed Could Reduce Asset Purchases

The Target for the Digital Euro is 2026

In an interview with Jun Ishikawa, Fabio Panetta, a Member of the European Central Bank Member, stated that the reason they started to work on the digital euro was trend and security.

One of the main reasons for a digital euro, Panetta said, would be to “prevent the European retail payments market from being dominated by a handful of non-European players,” which could lead to “insufficient competition and data protection.”

Emphasizing that the digital euro will provide its users with a completely safe, risk-free, and utterly liquid payment instrument, Panetta said that large investment inflows can be experienced in such tools unless there is a regulation, which may pose a threat a risk to financial stability. For example, holding more than 3 thousand euros will be prohibited. Or we will cut the money kept above a certain amount.”

Asked about when the digital euro will be available, Panetta said, “We started our discussions on the subject in 5 years to reach the target”.

Mentioning that China started digital money studies in 2013 and Sweden in 2017, Panetta emphasized that these countries said that they could extract the money in 2026.

Asked whether the digital yuan could pose a threat, Panetta suggested China could serve as more of a partner than a competitor. “In the longer term, building interoperability between central bank digital currencies could reinforce their domestic benefits,” he said.

“We can learn from each other and improve our understanding of the challenges that are associated with the possible introduction of a digital currency,” he added.

New Cash Handout for Households in Japan

The government of Japan is planning new cash assistance to needy households against the economic impact of Covid-19 to help ease the financial strain of the prolonged coronavirus pandemic, sources close to the matter said Tuesday.

Under the draft plan, cash up to 100,000 yen ($920) will be distributed to each needy household that does not have a deposit savings of more than 1 million yen ($9,190).

The government considers providing monthly payments of 60,000 yen to single-member households, 80,000 yen to two-person families, and 100,000 yen to households composed of three or more people for three months from July, earmarking 50 billion yen from the fiscal 2021 initial budget, the sources said.

Last year, within the scope of the economic struggle against Covid-19, 100 thousand yen in cash was given to all individuals with a population of 126 million in the country.

To support households reeling from the pandemic, the government has also provided interest-free loan programs without collateral.

Besides, Japanese Health Minister Norihisa Tamura said they were considering extending the current Covid-19 state of emergency declared for Tokyo, Osaka, and seven other prefectures in the country.

Noting that the rate of cases, which maintains its increasing trend, negatively affects the health system, Minister Tamura said that the state of emergency could be extended.

“Keeping an eye on extending the state of emergency, we will make a final decision by taking into account experts’ evaluations,” Tamura told a news conference on the matter.

Morgan Stanley: Fed Could Reduce Asset Purchases

The international investment firm Morgan Stanley expects the Fed to start reducing its asset purchases by the end of the year.

In addition, several central bank officials have said over the past week they believe it will be time soon to start discussing a reduction in the minimum $120 billion of bonds the Fed is buying each month.

To be noted, San Francisco Fed Chairman Mary Daly told CNBC yesterday about the reduction of $120 billion in bond purchases per month, “We are talking about talks to start negotiating the reduction in purchases.”

With almost zero interest rates, the Fed’s bond purchases keep borrowing costs low and facilitate investments that will create jobs.

“We’re talking about tapering, and that is what you want out of us. You want to be long-viewed here,” she said. “But I want to make sure that everyone knows it’s not about doing anything new. Right now, the policy is in a perfect place. The policy is supporting the American people, ” she noted.

She also sees “considerable momentum” in the economy. However, she thinks that with 8 million people still unemployed and the pandemic remaining an issue, now is not the time for the Fed to pull back.

“Importantly, part of the boom we are seeing is supported by the accommodation we’ve taken to ensure that the bridge is long enough so that every American gets over Covid and can fully reengage,” she said. “I think of it as excellent news, but it’s way too early to declare victory.”