The European Central Bank (ECB) has expressed satisfaction with the European Commission’s legislative proposals for the digital euro. ECB executive board member Fabio Panetta commended the proposals during a speech to the European Parliament’s Committee on Economic and Monetary Affairs on September 4. Panetta believes that these proposals position Europe as a leader among advanced economies in central bank digital currency (CBDC) development. He sees this initiative as a means to prevent private dominance in the financial sector, which can lead to adverse consequences.
The European Commission’s proposals, made public on June 28, aim to establish the digital euro as legal tender, making it mandatory for acceptance in payments. Panetta, a critic of cryptocurrencies, sees these proposals as a new way to preserve monetary sovereignty. They ensure that Europeans always have access to a public payment option, be it cash or digital, even as private payment services gain prominence. Panetta likened private payment systems to private messaging platforms, where users are compelled to use the most popular options.
One significant aspect of the EC’s proposals that Panetta praised is the privacy measures for the digital euro. Users’ personal details would remain concealed from the Eurosystem, and payment information would not be linked to individuals. Intermediaries would only have access to user information required for onboarding and compliance with existing regulations. Additionally, offline payments would offer cash-like privacy, with neither intermediaries nor the central bank processing the payment.
The proposals also include reasonable pricing policies and mechanisms for the ECB to maintain equilibrium in the financial system through tools like holding limits. Panetta emphasized that the introduction of a digital euro represents an opportunity rather than a risk for the European financial sector. He argued that failing to introduce a CBDC could result in Europe losing ground to new private solutions, citing PayPal’s stablecoin as an example of potential risks.
Panetta also highlighted that private payment service providers aim to expand their market share without the motivation to restrict their services or make them compatible with others. This could lead to a private service attaining a monopoly position in the market. In contrast, the digital euro would promote innovation across the euro area while considering orderly adjustments in the financial sector.
By FCCT Editorial Team
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