Seventy economists and policy experts have called on Members of the European Parliament (MEPs) to support a digital euro that clearly serves the general public interest, arguing that it’s crucial for Europe's monetary sovereignty and for ensuring access to central bank money in an increasingly cashless economy.
The open letter published on Sunday entitled “The Digital Euro: Let the Public Interest Prevail!” warns that with no strong public option, private stablecoins and foreign payments giants could gain even greater influence over Europe's digital payments.
The signatories, including José Leandro, former executive director of the European Union for Reconstruction and Development (EBRD), and French economist Thomas Piketty, describe the proposed central bank digital currency (CBDC) as a public good.
They advocate for a public, euro area-wide digital payment instrument issued by the Eurosystem, free for basic services, that might complement fairly than replace money.
Open letter to MEPs. Source: Sustainable Finance Lab
They warn that if the EU delays or waters down the project, European residents and merchants risk becoming more depending on private, mostly non-European card schemes and enormous technology payment platforms, which could weaken the resilience and autonomy of the European payments system in times of stress.
Preparatory phase and design decisions of the ECB
Their intervention comes because the European Central Bank (ECB) is within the preparatory phase of the digital euro project, working on a algorithm, technical architecture and offline functionality before a final decision on issuance.
The ECB describes the design of the digital euro as a public, pan-European payment solution that gives cash-like access to central bank money, including offline payments, while maintaining financial stability through tools resembling holding limits and tiered remuneration.
In a speech on January 9, ECB Executive Board member Philip Lane reiterated that the project goals to balance innovation, data protection and the continued role of banks as intermediaries within the retail payments system.
According to the ECB, a digital euro could support use cases resembling conditional payments and offline functionality, while respecting anti-money laundering (AML) and data protection requirements.
Consumer Concerns and Privacy Requirements
At the identical time, the project was met with skepticism amongst business banks, and a few policymakers were concerned about possible disintermediation of deposits, operational costs and unsure user adoption. Consumer surveys also show that strong data protection is a key requirement for public acceptance of a digital euro.
Analysts at BNP Paribas also stressed that the advantages of the digital euro have to be balanced against potential funding and profitability pressures for banks, depending on where holding limits and remuneration are set.
In response to Cointelegraph's questions, the ECB declined to comment directly on the economists' letter, but pointed to several recent studies.
A technical appendix analyzes the results of a digital euro on financial stability, with the person holding limit being 3,000 euros. The conclusion is that even in an unfavorable scenario there are not any concerns about financial stability.
Another report assesses how a digital euro would fit into the present payments ecosystem, while other papers examine data protection regulations and the investment costs for the euro area banking sector.
Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph's editorial guidelines and goals to offer accurate and up-to-date information. Readers are advised to independently confirm the knowledge. Read our editorial policies https://cointelegraph.com/editorial-policy
