European Central Bank Supports EC's Digital Euro Proposals, Focusing on Privacy and Financial Stability
Summary:
The European Central Bank (ECB) is pleased with the European Commission's legislative proposals for the digital euro. ECB executive board member Fabio Panetta praised the proposals, stating they would position Europe as a leader in CBDC development and address the dominance of private payment services. The proposals emphasize privacy, pricing policies, and tools for financial stability. Panetta warned about the risks of not introducing a digital euro and highlighted the potential impact of private solutions. The digital euro aims to ensure access to a public payment option and replicate cash-like privacy.
The European Central Bank (ECB) expressed its satisfaction with the legislative proposals put forth by the European Commission (EC) for the digital euro. In a speech to the European Parliament’s Committee on Economic and Monetary Affairs, ECB executive board member Fabio Panetta stated that these proposals would position Europe as a leader in central bank digital currency (CBDC) development, preventing private domination of the financial sector. Panetta, known for his criticism of cryptocurrencies, hailed the EC's proposals as a way to preserve monetary sovereignty and ensure that Europeans always have access to a public payment option. He drew parallels between private payment systems and private messaging, where users feel compelled to join the most popular platforms. Panetta stressed the need for legislators to ensure that a digital euro replicates the key characteristics of cash, particularly in terms of privacy.
The EC's proposals included granting the digital euro the status of legal tender, making its acceptance for payment mandatory. Panetta also commended the EC's privacy measures for the digital euro, emphasizing the Eurosystem's inability to access personal details or connect payment information to individuals. Intermediaries would only have access to the necessary user information for onboarding and regulatory compliance. Additionally, the ability to make offline payments would offer cash-like privacy, with neither the intermediary nor the central bank processing the transaction.
The proposals also addressed pricing policies and provided tools to the ECB for maintaining stability in the financial systems, such as holding limits. Panetta underlined that issuing a digital euro represents an opportunity, not a risk, for the European financial sector. He warned against the consequences of not introducing a CBDC, highlighting the potential impact of private solutions on the economy and citing Paypal's PYUSD stablecoin as an example of such risks.
Panetta explained that private payment service providers aim to capture a larger market share and have no incentive to restrict or make their services compatible with others, potentially leading to monopolistic situations. In contrast, the digital euro would offer a platform for pan-euro area innovations while carefully considering adjustments in the financial sector.
Published At
9/4/2023 8:57:47 PM
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