The digital euro project was the focus of a hearing by Fabio Panetta, member of the European Central Bank (ECB) Executive Board, invited by the European Parliament’s Committee on Economic and Monetary Affairs (ECON) on Monday 24 April, the day of the publication of the ECB’s third progress report on the digital euro.
The ECB is entering the final investigation phase of the digital euro project and its Governing Council has approved a third set of design options for the digital euro.
Mr Panetta reiterated that the digital euro would not replace cash, but that the study of such a project was important for European sovereignty.
The member of the ECB’s Executive Board wanted to remove an ambiguity. In his view, the digital euro will not be programmable in the sense that there would be no limitation on where or for how long consumers could use it or who could receive payments. This is to preserve the fungibility of the digital euro.
Mr Panetta prefers to talk about conditional payments. The user would define the functionalities of the euro and subscribe to them contractually with the intermediary. Intermediaries could be the supervised bodies and banks are not the only ones in this case. This choice should be left to the co-legislators.
With regard to privacy, one of the ECB’s proposals to the co-legislators is that the ECB should only have access to non-personal data.
Furthermore, Mr Panetta considered that one of the simplest ways to limit the risks of bank deposit flight and related financial instability would be to cap the limit of digital euros held in the digital wallet.
Replying to a question by Stefan Berger (EPP, German) on the technology supporting the digital euro, Mr Panetta stressed that blockchain technology was not excluded, but that there was no experience in this field for such a large monetary system.
Several MEPs, including Henrike Hahn (Greens/EFA, German) and Paul Tang (S&D, Dutch), expressed concern that the ECB’s technical work could restrict the policy options available to the EU legislator. Mr Panetta said that many issues remain to be decided by the co-legislators, such as extraterritoriality, who has access to the digital euro and privacy.
Finally, the member of the ECB’s Executive Board said that the end of the investigation period on the digital euro project would come this autumn. The implementation phase, if activated, would not mean the start of the digital euro issue either, he assured. The final decision will only be taken by the ECB Governing Council once the legislative proposal underpinning the digital central bank money, which the Commission will present at the end of May, has been finally adopted.
Link to ECB report: https://aeur.eu/f/6ip (Original version in French by Emilie Vanderhulst)