IMPORTANT POINTS:
- The EU’s digital euro faces obstacles in non-Euro countries, according to the European Parliament.
- International agreements are required for the adoption of CBDC in non-euro states.
- Technical and legal challenges emerge in the investigative phase of the ECB’s digital euro project.
The future of the digital euro proposed by the European Union could face significant obstacles in countries that do not use the euro, according to a recent analysis by the European Parliament.
The report, produced by the EMU and Economic Governance Surveillance Unit, highlights potential problems with the introduction and acceptance of CBDC in member states that are not part of the eurozone.
One of the key issues is that the full adoption of the digital euro in the EU would require the ratification of agreements at the international level between the bloc and non-euro countries.
The study details that: “Before any agreement between the European Central Bank (ECB) and a central bank of a non-euro country, it is essential that there is an international agreement between the European Union and the country in question.”
Pending Questions
The picture is further complicated when the legal dimensions of the digital euro are analyzed. Erwin Voloder, policy leader of the European Blockchain Association, when evaluating the report, told specialized media that “CBDCs operate in closed data cycles, which implies the need for data sharing agreements between nations.”
In addition, Voloder stressed that “there are intricate legal dilemmas regarding its use, digital portfolio management and jurisdictions. These aspects, which still lack concrete solutions, represent the biggest challenges for the future.”
Despite these challenges, there is a general feeling within the EU to find a consensus on how a digital euro could be integrated into the current payment system. However, Voloder warns that such integration brings operational and technical challenges, in addition to the need for clarifications in the area of monetary laws.
Finally, it is essential to remember that the Governing Council of the ECB, in July 2021, began the investigative phase of the Euro digital project. This phase, focused on addressing crucial issues related to its design and deployment, is scheduled to end in October. Subsequently, the ECB will determine whether to proceed to the development and test phases of the project.
