an article written by Fernando Navarrete, member of the European Parliament, rapporteur for The European Parliament for The Single Currency Package and the former Head of the Governor’s Office at Banco de España
The existing Digital Euro proposal seems to have emerged as part of a broader set of policy responses intended to make the financial system fit for the digital age and to restore citizens’ trust by delivering better results.
In fact, the ECB wants a digital euro to address several issues: a perceived imbalance between central bank money and commercial bank money due to the secular decline in the use of cash by citizens, which, in their view, might lead to a loss of the monetary anchor; digital sovereignty and strategic autonomy in payments, in order to reduce overdependence on non EU based providers; and the risk of monetary substitution due to non euro denominated stablecoins, with the aim of safeguarding the domestic role of the euro and strengthening its international role.
In my article, I explain why a digital euro does not appear to be the solution, and in some cases it is not even the most optimal solution from a cost benefit perspective, to any of these problems.
Amidst the ECB’s shifting narrative, the possible risks associated with a digital euro, such as the destabilising effect it could have on financial stability, which is implicitly recognised by the Commission through the introduction of holding limits, competition issues that arise from the combination of a novel distribution model that splits one transaction into two and a compensation framework that aims to fit within the traditional four corner card scheme while in reality introducing new actors, data privacy concerns that have sparked significant public debate, and the allocation of additional responsibilities in areas such as fraud prevention and anti money laundering, should be carefully assessed, especially now that Europe is facing a critical moment that requires swift but well calibrated action from its co – legislators.
More details here
Banking 4.0 – „how was the experience for you”
„To be honest I think that Sinaia, your conference, is much better then Davos.”
Many more interesting quotes in the video below:
