On Thursday 18 November, Fabio Panetta, a European Central Bank (ECB) Executive Board member who is in charge of the digital euro project, detailed the issues surrounding the creation of a digital central bank currency by 2026, in a meeting of the European Parliament's Committee on Economic and Monetary Affairs (see EUROPE 12762/17).
If we do not meet the demand for digital payments, “others will emerge and fill the gap”, according to Mr Panetta. He cited the entry into the market of technology giants and crypto-assets issuers, the value of which now exceeds those of securitised assets prior to the 2008 financial crisis, with the risks to financial stability that they entail.
In this way, he justified the creation of a digital euro that could be used for all types of payments. He cited other arguments such as the need to adapt to the new reality of payments in Europe, marked by a decrease in transactions in physical money, the search for greater European independence when third country providers carry out 70% of card transactions in the EU, the launch of innovative services, and respect for the privacy of users.
“The ECB has no commercial interest in monetising user data, so a digital euro would improve citizens’ welfare by giving them the option to use a form of digital money that protects their privacy”, said Panetta.
In response to a question from Ondřej Kovařík (Renew Europe, Czech Republic), the central banker stressed the importance of providing a digital currency that meets a requirement in terms of security and minimal transaction costs, without upsetting the current environment. Panetta also said that the goal was not to eliminate cash or the commercial money provided by banks.
In order to prevent users from transferring their deposits to the ECB, two types of “constraints” could be imposed: - limiting the remuneration of accounts in digital central bank money to the start-up phase (1 year?) before introducing penalties for certain amounts held; - imposing ceilings on the holding of digital euros and/or limits on the number of transactions that can be carried out.
Eero Heinäluoma (S&D, Finland) asked how the European Payments Initiative, a private initiative of some 30 banks from seven Member States, fits in with the digital euro project (see EUROPE 12829/4).
“I have just written to the promoters of this initiative to confirm our support, and we would like to see all 19 euro area countries and all European banks participating”, Mr Panetta said. (Original version in French by Mathieu Bion)