The Economic and Monetary Affairs Committee of the European Parliament has just published a relevant analytical document. This is entitled “Digital Euro: when in doubt, abstain (but prepare)”. It paints a mixed picture of the European CBDC. Here is what it is.
The ECB should remain focused on the test phase of the CBDC
Almost a month after discussing the advent of new restrictions on crypto payments, the European Parliament publishes a report on the CBDC. The analytical paper written by economist Ignazio Angeloni examines ten questions to which a ” forward-looking digital euro (EDP) would be confronted. However, he remained focused on the disadvantages of an EDP. It reveals that a digital euro could be a problem without a solution. In fact, the asset would put the ECB in competition with commercial banks for the deposits, while it collaborates with them.
Angeloni explained: This generates potentially negative incentives and justifies a well-designed compensation structure for services provided by banks. ECB reports do not provide any information on this subject. “. He highlighted that introducing a CBDC now could have a disruptive effect while the ECB is not prepared for it. The economist recommends for this purpose to wait and see how the situation developswhile studying the CBDC.
” The ECB should continue its exploration and possibly also launch the test phase in October, but should not actually launch an EDP unless new elements emerge in the future […] in favor of such an approach said Angeloni.
The CBDC should not undermine the banking system
The European Parliament report indicates that, on the one hand, the CBDC should be attractive enough to find a clientele. On the other hand, it will take exercise moderation so that it does not end up undermining the banking system.
Furthermore, any interest generated by the digital euro should be managed separately from cash interest rates. In this way, arbitrage operations may be possible.
Ignazio Angeloni quoted comments from US Federal Reserve Governor Christopher Waller in his report. Indeed, he recalled that a CBDC would constitute “ a solution in search of a problem “. It should be clarified that the Governor recently likened crypto to baseball cards, insisting that it is highly speculative.
Receive a digest of news in the world of cryptocurrencies by subscribing to our new service of daily and weekly so you don’t miss any of the essential Tremplin.io!
