European Central Bank (ECB) executive board member Fabio Panetta addressed the European Parliament’s Committee on Economic and Monetary Affairs recently. The focus of his address was the plans set forth by the European Commission (EC) to initiate a digital Euro. Panetta asserted that these ambitious plans could establish Europe as a leader in the central bank digital currencies (CBDCs) space. Attempting to curtail the unchecked supremacy of corporates over the financial industry, the project traces its roots back to October 2020, marked by transparency efforts through regular European Parliament updates.
The thrust of the mission is to safeguard European monetary sovereignty while preserving fiscal freedom in an increasingly digital world. European citizens would still have the choice between public and private payment methods, and forceful usage of the digital Euro would not be encouraged. Privacy and data security form the backbone of this initiative, focusing on reducing fraudulent activities like money laundering and terror financing and ensuring superior privacy standards offline.
Highlighting the privacy aspects, it was made clear that the Eurosystem doesn’t access personal user data, while intermediaries collect only vital information for regulatory compliance. Explicit mention of the ECB’s capacity to wield necessary tools to strike a balance between private and central bank money also went down well. Aspects like holding limits are to counter potential hazards for monetary policy, financial stability, and credit allocation.
Emphasizing the potential represented by the digital Euro, Panetta says, “We are designing it as a safe payment tool in order to preserve the role of public money – that is, money backed by the state – while balancing innovation in payments with the stability of the financial sector and guaranteeing privacy.” The anticipated digital euro would be administered via the existing bank structures and payment providers, prioritizing privacy and compatibility with existing payment methodologies.
But alongside the numerous benefits that a digital euro would bring, some scepticism remains. Would this digital currency drive away private competencies from the financial sector? How capable will the central bank, such as the ECB, manage the complexities of a virtual currency system? The answers lie in the future, where Panetta foresees a secure payment alternative fostering innovation and competition among payment service providers. The near future sees the ECB finishing their investigation phase, and a decision to progress to the next phase will only be taken once the legislative framework gets adopted. It is clear that the European financial sector stands on the cusp of a new era.
Source: Cryptonews
