A digital euro would stand as a potent symbol of European unity, according to a blog by the International Monetary Fund.
As well as protecting European competitiveness, a digital euro would safeguard monetary stability and fend off private payment monopolies, writes Philip R. Lane, chief economist and a member of the executive board of the European Central Bank.
Last month, the European Central Bank (ECB) announced the possibility of launching a pilot of its digital currency in 2027, subject to lawmaker approval. For more detail on the plans see previous on CaPio.
According to Lane: “A digital euro will minimize the likelihood of adverse economic outcomes in the future and ensure the resilience of the monetary system in an increasingly digital world.”
Differing from decentralised cryptocurrencies such as Bitcoin and Ethereum, the digital euro will be a central bank digital currency (CBDC), regulated under EU monetary and data protection law.
The project has recently transitioned from the build phase to modular build.
The currency is designed to maintain the two-tier monetary system by keeping commercial banks at the centre of customer relationships while providing retail access to central bank money, combining the 24/7 programmability of digital assets with the regulatory certainty of traditional finance.
However, following the plan’s release, the FT reported pushback from EU lawmakers and Europe’s banking industry, including Deutsche Bank, BNP Paribas, and ING.
The banks warned that the digital euro could undermine private-sector payment systems.
“The current design of the retail digital euro largely addresses the same use cases as private solutions, without offering any clear added value for consumers,” the banks said, according to the FT.
