The EU financial services chief, Mairead McGuinness, recommends a temperate approach to digitizing the euro, championing a strategic approach to be taken after the EU elections in 2024. With the European Central Bank (ECB) set to decide the project’s fate later this year, McGuinness emphasizes the importance of moving at a steady pace. She suggests that the forthcoming EU Commission, to be selected by the newly elected parliament, should approach the central bank digital currency (CBDC) project with discretion and deliberation.
Indeed, the digital era could be knocking insistently on old tradition’s door but unnerving ripples in the financial industry argue against diving heedlessly into the digital euro. Cash usage is declining, and with technology at the forefront of commerce, McGuinness comments reference the necessity for a digital alternative. If “we are using our cards and phones to buy, we’re doing e-commerce and if there were a time when cash was much diminished then we need a digital version of this.”
The EU Commission has conversely proposed free essential digital euro services, privacy protection, and offline payments in their legislative plan for a digital euro. Moreover, a concerning caveat involves compelling banks, insurers, and funds to share customer data with fintech firms, in exchange for compensation. The digital era seems enticing but bridging the gap between old and new may require compromises that some are unwilling to make.
Supporters of the EU Commission’s plan, like ECB executive board member Fabio Panetta, call the European CBDC “a new paradigm for preserving monetary sovereignty”. The EU seems ready to finalize the CBDC project’s exploration phase by October 2023, laying the groundwork for further technological solution testing. Yet, whether these proposed methods will be executed is left in the hands of the European Commission, selected by the European Council, and approved or rejected by the elected parliament. A predicament that leaves the fate of the digital Euro suspended until after the 2024 European Parliament election.
Overall, whilst the promising benefits of a digital Euro cannot be ignored, careful planning and thoughtful implementation are essential to ensure that we don’t compromise the very foundations of our financial systems in the pursuit of progress. Following McGuinness’s advice, it may be wise to approach the digital Euro “quietly and slowly”.
Source: Cointelegraph
