The currency war first evokes competitive devaluations. Another currency war is looming, one that opposes public (or official) currencies and private currencies and whose stakes, eminently political, affect 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, these privately owned digital currencies, with unstable prices for many of them, and without central banks capable of serving as a "lender of last resort" in the event of a blow. Certainly, bitcoin and other cryptocurrencies do not perform 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 2.5 billion users!

Faced with the privatization of the currency, which takes us far back in history, the authorities are not left out. Central banks want to regain 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 only implementing, each in its sphere of control, the new digital technologies.

The digital euro will complement cash, partly replacing it. Everywhere, the share of cash in total means of payment is declining, with successive waves of technological innovations. Some current transactions will however 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 trade at 1/1 parity against all other forms of the euro. It will therefore be a "stable coin", just as the Diem is expected as a "stable coin" against the dollar. This property will avoid the volatility 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, potentially increase the speed of circulation of money. Digital technology is expanding the field of possibilities, at the same time as it lends itself to cyberattacks.

With the digital currencies of central banks, the articulation between public and private currencies will become essential. Private cryptocurrencies are delivered for their price to the permanent game of the law of supply and demand. What must be called the "bitcoin madness" illustrates this at the moment. By definition, the digital euro will have the ECB as the guarantor of its stability and liquidity.

Public and private digital currencies will compete. With, at the key, the primacy of what makes the quality of a currency: the stability of its value, the depth of the financial markets to which it is backed, 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, against the laundering of dirty money and against the financing of terrorism.