The digital euro should be attractive but not too successful, says Panetta of the ECB - Finance
The digital euro should be attractive but not too successful, says Panetta of the ECB - Finance
The digital euro is said to be an attractive means of payment, but his design is intended to prevent it from becoming a value -added presence that it threatens banks and threatens private money, according to Fabio Panetta, high -ranking board of the European Central Bank. Panetta emphasized that both this paradox and the need to issue a successful CBDC require attention.
Europe's digital currency supplements cash and is Monterey anchor
While cash currently gives people access to digital central bank money, its importance in payment transactions, since consumers are increasingly preferring to pay digitally and buy online. Internet sales in the euro area have doubled since 2015 and only around 20 % of the cash stock are now being used for payments, compared to 35 % a decades and a half ago, Fabio Panetta, member of the directorate of the European Central Bank in a speech at the Royal Institute Elcano in Madrid.
"Since people start using cash more than value preservatives instead of a means of payment, a digital euro would enable them to continue using central bank money as a medium of exchange in the digital age," said Panetta during his speech. Focus on the future role of the digital currencies of the central banks ( cbdcs ). In his view, a digital euro and cash would complement each other to ensure that central bank money remains a monetary anchor for the payment ecosystem.
To achieve this, the digital form of the euro should be attractive for regular use in payment transactions, says the ECB official. At the same time, its design is to prevent "as a value preservation means that it is so successful that it displaces private money and increases the risk of bankruptcy". Fabio Panetta emphasized in his comments:
While we have discussed the possibility that a digital euro could be "too successful" paradoxically, we have to pay just as much attention to the risk that it is not successful enough.
The efforts to issue the CBDC would have to meet certain conditions for success, explained Panetta. In addition to its attractiveness as the "the only risk -free digital money form", the digital euro should enable digital payments wherever the Europeans need it for this purpose. In addition, retailers would have to be sure that consumers want to use it, while intermediaries should determine that the benefits of sales outweigh the costs.
"For the success of the digital euro, it is therefore crucial to develop a convincing promise of performance for everyone involved," emphasized Fabio Panetta in the speech published by the ECB. This, he added, was a key element of the examination phase of the CBDC project, the Started from the bank at the beginning of the year. The executive pointed out:
The ECB and the European Commission jointly examine a broad spectrum of political, legal and creative questions at the technical level, which arise from a possible introduction of a digital euro, including the role that the status of a statutory payment could play when the desired network effects could be achieved.
digital euro should be convenient and help data protection, Panetta
claimsFabio Panetta revealed that the digital euro would offer a free and convenient opportunity for consumers to pay digitally everywhere in the euro area ". He added that this would also increase privacy for digital payments, since the ECB has no interest in monetizing the data of the users. In his opinion, compliance with the regulations to combat money laundering would not affect improvement in privacy.
The representative of the ECB management is of the opinion that the digital euro should not compete with digital payment services from the private sector and intermediaries will be able to take users on board by offering new services with "digital euros" such as credit facilities and automated payments. Thus, small financial institutions and fintech companies would benefit from "same competitive conditions" and get a chance to compete with large technology companies, said Panetta.
The member of the ECB directorate also sees the digital euro as a support for the international role of the European Community Currency and the autonomy of Europe in global payment transactions. "The provision for non-possible and interoperability with other CBDCs could make this easier cross -border payments , which are currently at high costs, low speeds and limited access, ”says Fabio Panetta.
He is convinced that the increasing range of private digital currencies such as stable coins and the broad availability of private digital payment methods would not make the digital euro superfluous. "With digitization in full swing, the central banks have to prepare for a digital future in which the demand for cash could weaken as a medium of exchange and the convert of private money in cash must be supplemented by converitivity into digital central bank money," he emphasized.
Dutzen of central banks around the world have the possible edition of CBDCS in response to the growing popularity of cryptocurrencies and the declining use of banknotes and coins. In addition to the Ezb , including the US Federal Federal Bank and Bank of Russia . The Volksbank from China probably has the most advanced project with domestic attempts already in progress and plans the test of the digital yuan in cross-border transactions.
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