An e-euro need not fall victim to post-crypto bubble apathy
The digital euro, like a lot of central bank proposals around the world to issue virtual cash, has so far existed in a policy sweet spot: Maximum imagination, minimal execution. Dreaming up tokens, wallets or ledgers that may future-proof fiat money against the next Bitcoin or stablecoin is easier and cheaper than doing it for real.
As deadlines loom for a shift from pumping out jargon-filled white papers into an actual decision on whether to go ahead, however, feet have been shuffling awkwardly as big risks hover into view. A string of bank failures in the US—in which cryptocurrency played a part—and the downfall of Credit Suisse Group AG have attuned central bankers everywhere to the dangers of tinkering with a financial system where depositors are increasingly flighty.
Throwing a digital euro into the banking system, for example, could suck deposits away; one study found that even a small take-up of €2,000 ($2,180) per household could rob smaller banks of more than 10% of their deposits. The risk of a public backlash is also seen to be rising, fed both by assorted conspiracy theories of Orwellian control, but also the undeniable truth that an online digital euro will offer less privacy than cash.
Some surveys [in the West] suggest consumers aren’t keen on central banks accessing personal payments data. Then there is the niggling feeling of central banks proposing to fix what ain’t broke at the taxpayer’s expense.
Cryptocurrency fever has cooled since the pandemic and venture capital funding has more or less dried up without any major disruption—suggesting central banks’ existing tool-kit is still enough to defend the financial system and that maybe the inflation fight should be its real priority. Sweden now says it
. Read more on livemint.com
