In a landmark move, the Spanish central bank, also known as Banco de España made an announcement regarding the use of private payment services in the era of the digital euro. Margarita Delgado, the deputy governor, voiced concern about financial stability issues while also highlighting the potential for nonbank financial services providers.
Delgado addressed university students and interested parties about the introduction of the digital euro on August 25th, with her speech stemming from the European Commission’s recently proposed legislative plan for the digital euro. She put emphasis on how private payment solutions will interact with the digital euro and its infrastructure in her detailed discourse.
In her perspective, the digital euro can be beneficial to the European Union in a multitude of ways – it can help overcome cross-border payment barriers, reduce business costs associated with the use of private payment service providers (PSPs), and fill the apparent lack of PSPs in Europe. Yet, the development of Central Bank Digital Currencies and stablecoins elsewhere has the potential to exacerbate the problem if the digital euro is not introduced.
While acknowledging these potential pitfalls, she optimistically stated, “We believe there is enough space for a digital euro and private payment solutions to co-exist. […] Our expectation is that the digital euro enables the development of new pan-European payment and financial services by the private sector, making it easier to compete with non-European solutions.”
The European Central Bank (ECB) has its own plan to get the digital euro up and running within the continent before broadening its scope. Delgado believes that the retail use of the digital euro beyond European borders will offer private PSPs new opportunities to serve as intermediaries.
However, the ECB’s proposed plan has faced criticism. Some critics question the feasibility of the digital euro being available to a broad population without a common supervisory and resolution authority in place. These concerns highlight the necessity for thorough consideration of financial security before the digital euro is launched into the market.
With this new revolution on the horizon, the question remains – to what extent can these new nonbank providers match the resilience and reliability of traditional banking systems? The resolution of this question will remain a fundamental factor in the successful implementation of the digital euro.
Source: Cointelegraph
