The European Central Bank’s Panetta said the digital euro should be attractive, but not “too successful” – Finance Bitcoin News
Fabio Panetta, a senior ECB executive, stated that the digital euro should be an attractive payment method, but its design should prevent it from becoming so successful as a store of value that it threatens Bank and private funds. Panetta emphasized that this paradox and the need to issue a successful CBDC both require attention.
European digital currency replenishes cash and becomes a Monterrey anchor
Although cash currently provides people with a way to use the central bank’s digital currency, as consumers increasingly prefer digital payments and online shopping, its importance in payment is declining. Fabio Panetta, a member of the Executive Committee of the European Central Bank, pointed out that since 2015, Internet sales in the euro area have doubled, and now only about 20% of the cash stock is used for payments. The former ratio is 35%. Lecture at the Elcano Royal Institute in Madrid.
“As people start to use cash more as a store of value rather than a means of payment, having a digital euro will enable them to continue to use central bank currency as a means of exchange in the digital age,” Panetta said in her speech, focusing on central bank digital currencies Future role (CBDC). In his view, the digital euro and cash will complement each other to ensure that the central bank currency remains the monetary anchor of the payment ecosystem.
ECB officials believe that in order to achieve this goal, the digital form of the euro should be attractive for frequent payments. At the same time, its design should prevent it from being “so successful as a store of value that it crowds out private funds and increases the risk of bank runs.” Fabio Panetta emphasized in the comments:
Although we have discussed in detail the possibility of the digital euro being paradoxically “too successful”, we need to pay as much attention to the risk of it not being successful enough.
Panetta explained that the effort to issue a CBDC needs to meet certain conditions for success. In addition to its appeal as the “only risk-free form of digital currency,” the digital euro also needs to facilitate digital payments wherever Europeans need it for this purpose. In addition, merchants must ensure that consumers are willing to use it, while intermediaries should find that the benefits of their distribution outweigh the costs.
“Therefore, developing a compelling value proposition for all stakeholders is essential to the success of the digital euro,” Fabio Panetta insisted in his speech Publish By the European Central Bank. He added that this is a key element of the investigation phase of the CBDC project. roll out By the bank earlier this year. The executive pointed out:
The European Central Bank and the European Commission are jointly reviewing a wide range of policy, legal, and design issues that may arise after the introduction of the digital euro at the technical level, including the possible role of legal tender status in achieving expected network effects.
Panetta claims that the digital euro is convenient and helps protect privacy
Fabio Panetta revealed that for consumers, the digital euro will provide a “free and convenient way to make digital payments anywhere in the Eurozone.” He added that this will also increase the privacy of digital payments because he said the European Central Bank has no interest in monetizing user data. In his view, compliance with anti-money laundering regulations will not interfere with privacy enhancement.
The management representative of the European Central Bank believes that the digital euro should not compete with the digital payment services provided by the private sector. Intermediaries will be able to attract users by providing new services that are “intrinsic to the digital euro” (such as credit facilities and automatic payments). Therefore, small financial institutions and financial technology companies will benefit from a “level playing field” and have the opportunity to compete with large technology companies, Panetta said.
Members of the ECB Executive Committee also believe that the digital euro supports the international role of a common European currency and Europe’s autonomy in global payments. “Giving non-residents access and interoperability with other CBDCs can facilitate Cross-border payment, Is currently full of high costs, low speeds and limited access,” Fabio Panetta commented.
He firmly believes that the increasing supply of private digital currencies such as stable coins and the widespread use of private digital payment methods will not make the digital euro redundant. “With the rapid development of digitization, the central bank must prepare for the digital future. In this future, the demand for cash as a medium of exchange may be weakened. It is necessary to convert private currency into cash, supplemented by convertible into central bank digital currency. ,” he insisted. .
Dozens of central bank institutions around the world have been exploring possible issuance CBDC In response to the increasing popularity of cryptocurrencies and the decline in the use of banknotes and coins.Apart from European Central Bank, These include United States Federal Reserve with Bank of Russia. this People’s Bank of China It can be said to be the most advanced project, Domestic test Already in progress and plans to test the digital renminbi Cross-border trade.
Do you think the digital euro will be a successful CBDC project? Share your expectations in the comments section below.
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