News reports revealed that various members of the European Union are earnestly researching the potential capabilities of a central bank digital currency (CBDC). In addition, the public and private banking sectors recently shared their takes on the virtual euro.
According to recent reports, many speakers publish their views on the digital euro in the April edition of the Views magazine. In addition, Evelien Witlox, while directing the recent ECB conference on the digital euro stated that the ECB deemed digital work to have three crucial utility cases.
Witlox said the uses include peer-to-peer payments, customer-to-business payments, and payments by or to the government. He added that these utility cases are very sensitive to private bankers.
Official Form European Banking Institutes’ Views On Digital Euro
Meanwhile, the deputy CEO at French bank Crédit Agricole, Jerome Grivet, commented on the negative impact the CBDC has on local banks’ business system. He said the digital euro can compete with the collective activities of local banks, destabilizing their financing prowess.
Furthermore, he suggested that CBDC should be solely used as a payment means rather than to store value to avoid its demeaning impacts. Burkhard Balz, a Deutsche Bundesbank executive member reportedly supported Grivet’s view.
Explaining further, Balz said ECB and national central banks should minimize their involvement in digital euro governance. Instead, they should allow the private sector to have a major footprint in overseeing and distributing the digital money.
In addition, Balz suggested that the sector should explore the potential economic opportunities embedded in providing digital euro rather than seeing it as an obligation. He urged them to use it to compete and develop creative solutions for economic problems.
While sharing his view, Grivet also pointed out that it is difficult to predict consumers’ reaction to the new innovative CBDC and how well they would adopt it. He used the digital yuan which didn’t go well with the Chinese as an example.
Stating his awareness of these issues, Witlox affirmed that the digital euro would be user-friendly. He said it would accommodate those without a credit card or bank account. Meaning the digital euro would be free, according to the ECB representative.
Concerning the anonymity nature of CBDC, Witlox claimed that the European Central Bank is not interested in customers’ private information. He added that it is working on a model that would preserve users’ privacy naturally.
Officials From Other Countries Spoke On CBDC
The Views magazine also contained the opinions of some Asian and American officials on the concept of cryptocurrency regulation. Kristin Johnson, a US Commodity Futures Trading Commission executive, and Tomoko Amaya, V.P at Financial Service Agency in Japan, aired their opinions.
According to Johnson, the digital currency should be governed by the same rules and standards used in the traditional finance system. He added that the varied nature of blockchain (not crypto) makes the extent of the association of the potential merits of decentralized ledger innovation doubtful.
Tomoko Amaya, on the other hand, spoke about the risks of mismatched liquidity and maturity, stablecoins, excessive leverage, mismanagement of customers’ funds, and other conflicting issues. Amaya considered Japan’s strict crypto rules a success, emphasizing the essence of a stringent international regulatory framework.
Meanwhile, the ECB recently released its report on the development of the digital euro. The features of the potential digital euro include payment settlement, cross-border functions, and touchless in-store sales.