The ECB is looking to accelerate its plans with the issuance of Digital Euro as other economies and central banks are gearing up with similar plans.
Lawmakers at the European Union are likely to take a closer look at its central bank digital currency (CBDC) Digital Euro. The European Commission said that it is considering introducing a bill for the digital euro in early 2023.
The digital euro bill will serve as the legal foundation for the European Central Bank (ECB) towards its ongoing technical work on CBDC. EC finance chief Mairead McGuinness has officially spoken about this plan earlier this week. The announcement of considering digital euro legislation came at a fintech conference.
The Commissioner for financial services said: “Our goal is to table legislation in early 2023. A targeted legislative consultation in the coming weeks”.
Central banking institutions across the globe are working on CBDCs and the ECB is one among them. It is already testing designs and system infrastructure with digital euro. However, for the ECB to implement Digital euro at their end, it will need approval from Eurozone governors. If these lawmakers give the green light, then the digital euro will be available for issuance by 2025.
ECB Executive Board member Fabio Panetta told MEPs in mid-November said that it’s important to address the matter of Digital Euro firsthand. Panetta said:
“If we don’t satisfy this demand, then others will do it. As co-legislators you will play a key role in any changes to the EU legislative framework that may be necessary to introduce a digital euro.”
Last year, the ECB also published a public report on Digital Euro. It further noted that ECB can help in lowering interest rates, speed up the transaction process and reduce cash use.
Putting Safeguards in Place
As reported by Politico, EC finance chief Mairead McGuinness said that it is important to have necessary safeguards in place. One must be careful that any such move with issuing Digital Euro doesn’t disrupt the region’s financial system.
Baking institutions fear that depositors could convert their savings to CBDC with a click of a button. So in the case of any financial crisis, it will create an online bank run.
Last year, ECB executive Fabio Panetta expressed his confidence that having digital euro will guarantee privacy and protect the EU’s monetary sovereignty.
Also, Germany and France have asked the ECB to speed up the process on Digital Euro. The two top economies in the EU don’t want to be left behind when others are making swift progress. Asian economic giant China has already made considerable progress with its Digital Yuan. India said that it will also be planning for introducing Digital Rupee by early 2023.