The European Union (EU) wants its CBDC deemed to be effective in competing with cryptos. Since she disclosed her project, it has met with little enthusiasm if not hostility. Faced with this situation, the European Central Bank (ECB) wishes to recall its relevance.
The digital euro, a need for Europe according to the ECB
Recently, the Economic and Monetary Affairs Committee of the European Parliament published a document on the CBDC. Entitled “Digital Euro: when in doubt, abstain (but prepare)”, the text indicates to slow down on its launch.
If we must therefore prepare for it, the European Central Bank (ECB) seems to have taken the measure of the task. This explains why she works at recall, according to her, the relevance of the project. According to her, the EU needs a CBDC.
For the institution, this would be the only option available to the old continent to have a payment system. A mechanism “risk free” able to compete with traditional payment systems.
The ECB seems to echo the advocates of adopting a European CBDC. For the latter, this choice would be justified by practical necessities. Among them is adapting to the decline in the use of fiat currency.
On the other hand, proponents argue that not making this choice means letting other payment options prevail. We could thus, according to them, witness the hegemony of stablecoins, or worse of CBDCs issued elsewhere.
These ideas are far from convincing a fortiori to achieve unanimity. The situation is remarkable, especially among decision-makers who are deeply divided on the issue. For Tim Adams, managing director of the Institute of International Finance, the European CBDC project is not a good idea.
This because she adds “complexity and inefficiency” available payment methods. “Parallel payment systems could tie up capital and liquidity, the new system would likely face the same issues and it would be expensive,” he indicates. Same story on the side of the bankers. They are worried that the CBDC will hand them over to a massive bank run.
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