EBAday 2023: Digital euro on unsteady ground
The ECB laid out its current thinking on the digital euro in a progress report in April. Along with the report the ECB also published focus group findings which found most participants were interested in trying some of the digital wallet features presented.
In a speech presenting these findings, Fabio Panetta, member of the ECB Executive Board, said: “We will take all the necessary measures to ensure that the digital euro would act as a true public good. But all European institutions have to play their part to achieve our common goal of making the digital euro a success.”
However, in the weeks following this speech the European Parliament released a report which argued that the risks of a digital euro outweigh the benefits.
In the paper, titled ‘Digital Euro: When in doubt, abstain (but be prepared)’, the European Parliament’s Committee on Economic and Monetary Affairs has called in the Economic Governance and EMU Scrutiny Unit said that the ECB should continue to explore the CBDCs, including carrying out a testing phase.
However, the unit also argued the ECB should "in the end not launch a PDE [potential digital euro] unless new elements emerge strongly supporting such a decision. At the present time, the risks and imponderables of this enterprise are stronger than the arguments in favour of it.”
With this increased pressure being placed on a future CBDC for Europe, the future looks somewhat unsteady.
Although the possibility of retail and wholesale CBDCs is becoming more of a reality, it is important that the key criteria for its functioning are met. Additionally, for banks, merchants, and customers, it is important to understand what their expectations are from a digital euro, and what outcomes they hope to see.
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