Key facts:
- Testing of Europe’s CBDC could begin in October.
- “We must keep the money of the central bank at the axis of the financial system,” said Fabio Panetta.
Fabio Panetta, one of the members of the Executive Committee of the European Central Bank (ECB), announced that the European Commission will present a legislative proposal for the digital euro next June. The decision on further steps will be taken in October, he added.
In an interview with the official ECB site, the Italian assured that the eurozone bank maintains “regular contact” with the European Commission for the creation of a regulatory framework for the digital euro. The currency will be the official CBDC (Central Bank digital currency) in the 27 countries that make up the European Union.
“We study the design of the digital euro, its distribution and its impact on the financial sector,” said Panetta. Then, he assured that the proposal that should arrive in June will have a response in October from the Governing Council of the ECB.
This body will be the one that decides “if a preparation phase to develop and test the digital euro begins.” The testing phase for the European CBDC could last two to three years, he said.
If all goes well and both the Governing Council of the ECB and the legislators of the European Parliament approve it, the digital euro could come out in three or four years, Panetta estimated.
The ECB’s defense of the digital euro
Beyond the development deadlines, in the interview, Panetta was also asked about the benefits of using the digital euro and the potential risks of this digital currency.
Regarding the former, the ECB executive stressed the need to “offer citizens a risk-free digital means of payment that they can use for free anywhere in the euro area.”
Such a solution does not exist at the moment, he added, while stressing that the card payment market is dominated by two companies that are not European (alluding to Visa and Mastercard). The official said that this would be unthinkable in the United States and warned about the practice of many companies selling the personal data of their users.
On the other hand, Panetta stressed the importance of “keeping the money of the central banks at the center of the financial system”. In this sense, the growing adoption of cryptocurrencies susch as bitcoin (BTC) is a concern for entities such as the ECB, as reported in the Market Times.
Finally, regarding the criticisms made of CBDCs for the lack of privacy they provide to those who operate with them, he clarified that “the ECB will not have access to personal data”. The distribution of the digital euro will be handled by financial intermediaries, he said, and “a balance will have to be found between ensuring confidentiality and combating money laundering and terrorist financing.” Such a balance, he concluded, will be in charge of the legislators.
