The European Central Bank’s contemplation of introducing a digital euro has sparked a lively debate among EU lawmakers, with some expressing skepticism and others pushing for its acceptance. The parliamentary hearing on the matter raised questions about the purpose and potential risks associated with a digital euro.
Evaluating the Need for Digital Euros
While the European Central Bank (ECB) argues that a digital euro aligns with technological advancements, lawmakers remain unconvinced. The concept of issuing digital currency alongside traditional banknotes and coins has gained attention not only in the EU but globally, with other jurisdictions like China, the UK, and Sweden exploring similar possibilities.
Banking on State-Issued Currency
Advocates of the digital euro, such as Miguel Fernández Ordóñez, a former Spanish finance minister, and central bank governor, contend that state-issued currency would eliminate banking crises. Ordóñez asserts that the digital euro, being a secure asset, could reduce the need for extensive banking regulations and taxpayer bailouts.
Challenges and Concerns
Opponents, however, argue that a digital euro represents an unwarranted state intervention in a competitive market where banks and payment providers operate. Ignazio Angeloni, a professor at the European University Institute, raised concerns about the ECB acting as both a regulator and a market participant, likening it to a referee also playing the game.
Balancing Act: Regulation vs. Market Dynamics
The ECB’s attempt to address concerns by limiting individual digital euro holdings and involving intermediaries like banks has met criticism. Some lawmakers question the feasibility of the digital euro if consumers need multiple accounts to comply with holding limits, questioning its utility and potential adoption.
The Future of the Digital Euro: Divided Opinions
Lawmakers like Stefan Berger, tasked with drafting the parliament’s stance on the digital euro, remain determined to explore its potential. Despite opposing views, Berger aims to foster a comprehensive discussion and position the European Parliament to express its stance on the digital euro, acknowledging that critical arguments need thorough examination.
In conclusion, the fate of the digital euro remains uncertain, with EU lawmakers engaging in a deliberative process to weigh its merits and drawbacks before arriving at a definitive decision.
SOURCE: Ref Image from Euronews
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