European Central Bank wants to dispel German doubts about digital euro
A digital euro would not be a threat to savers, European Central Bank executives say.
The European Central Bank has been considering whether to launch a digital euro project within five years to Bitcoin Pro complement the current central bank money. High-profile leaders such as ECB President Christine Lagarde have been largely positive about it. The leadership of the German Bundesbank, on the other hand, is not convinced.
In a new opinion piece for the Frankfurter Allgemeine Zeitung, ECB Executive Board member Fabio Panetta and his colleague Ulrich Bindseil tried to address some of the Germans‘ concerns:
„The ECB is by no means planning to force significantly more negative interest rates with a digital euro. As long as there is cash, you can always hold it at a zero percent interest rate.“
Panetta and Bindseil’s comments directly echoed the Bundesbank’s previous suggestions that a digital euro could be „disastrous for savers“. They also addressed economist Richard Werner’s concerns that the ECB’s interest in a digital euro would take away vital deposit business from commercial banks.
However, Panetta and Bindseil argued that a digital euro could ensure that it would not compete with bank deposits.
They referred to earlier proposals for caps on digital euro holdings for citizens
Above all, they stressed the importance of the project in ensuring the financial autonomy and resilience of the eurozone against foreign corporations and other regional players:
„We need to prevent European payments from being dominated by non-European providers, such as global tech giants offering artificial currencies in the future. If we prepare for a digital euro, we also secure Europe’s autonomy. This is a hedge in case undesirable scenarios occur.“
Panetta and Bindseil are clearly alluding to the fact that Facebook has been trying to launch a stablecoin linked to fiat currency for years. Meanwhile, economic powers like China are already much further ahead with their own digital central bank currency.
German Finance Minister Olaf Scholz recently called Facebook’s stablecoin proposal called Diem, which has shed its former name Libra, a „wolf in sheep’s clothing“, criticising it. He reiterated that the German government would „not accept“ the market entry because regulatory risks were insufficiently considered.