Will the 350 million inhabitants of the eurozone adopt a new digital version of the euro in the coming years? This appears to be the aim of the European Central Bank, which has realized its vision of a central bank digital currency in which such “regulated intermediaries” could operate. The agency refers to consumer applications that “provide contactless payments or QR codes.”
No limitations on the digital euro?
USA, China, UK… It is no longer a secret for anyone, in the age of Bitcoin and altcoins, the main countries of the world want to acquire a digital currency. This project is progressing faster on the side of the Middle Empire, although few people talk about it.
The European Union is one of the countries with such ambitions. Brussels, which announced its plan years ago, is now trying to reassure EU residents.
A digital euro future – which the crypto ecosystem is wary of – will never be a “programmable currency” with limited uses, a senior European Central Bank (ECB) official said on Monday, hoping to make it accessible to as many people as possible.
“Let’s be clear: the digital euro will never be a programmable currency,” said Fabio Panetta, member of the ECB’s executive committee, before the European Parliament’s Economic and Monetary Affairs Committee.
This means that the ECB will not be able to impose restrictions on how this digital euro can be used, for any purchase, where and when. Otherwise, it would amount to “issuing bonds (…) where the central bank issues money, not bonds,” he stressed.
However, this fear remains very strong, because with the blockchain it is in fact possible to follow all the transactions carried out with a single monetary unit. Even if the ECB wants to keep its eyes closed, it wants to be able to track transactions in cases of money laundering, terrorist financing or tax evasion.
No daily or regular purchases
This resource cannot be used for regular payments, such as utility bills or rent. The ECB’s goal is to keep the banks in the payment circuit.
“We believe that supervised intermediaries, who are in direct contact with users, are best suited to identify use cases for conditional payments and any other prepayment service”, justifies the ECB executive.
For the countries and for the EU, it is a question of maintaining control of monetary power, all the more important in the face of high inflation which is trying to contain itself from the Covid crisis.
Faced with a digital euro, crypto-assets traded via blockchain promise decentralization or, like bitcoin, limit the number to 21 million tokens to avoid the side effects of money printing.
Maintain economic sovereignty
The advent of central bank electronic money would also give Europe “strong leverage to assert our sovereignty in the face of private initiatives such as Libra”.
The US also wants to work with the Federal Reserve to maintain its global monetary leadership through the e-dollar project.
Fabio Panetta said the first version of the app “should offer contactless payments or QR codes”. Carriers could be smartphones, payment cards and other smart watches.
As the technology develops, “other forms of payment” offered by “regulated intermediaries” may emerge in the future, he said.
The Governing Council of the ECB will decide in the autumn whether to enter the pilot phase of creating a digital euro, in response to the growing dematerialisation of payments and the proliferation of cryptocurrencies or digital versions of the currency, including the Chinese “digital yuan” project.
The ECB can decide whether or not to issue a digital euro at a later stage, once the EU Parliament and Council have adopted their legislative framework.