ECB Top Officials Back Europe’s CBDC Initiative Over Cryptocurrencies

ECB Top Officials Back Europe's CBDC Initiative Over Cryptocurrencies
  • The existing model’s stability is based on using public money as an anchor.
  • Non-European businesses might gain a monopoly on the European payments market.

Central bank money is essential for financial stability as digital payments continue to grow. According to European Central Bank (ECB) President Christine Lagarde and Executive Board Member Fabio Panetta, this is possible with the digital euro, according to their statements.

In a blog post released this week by the European Central Bank’s monetary authority, the bank’s most senior officials backed Europe’s central bank digital currency (CBDC), arguing that the “successful model for payments” that endured for decades is now under threat.

Euro’s Global Significance Under Jeopardy

The existing model’s stability is based on using public money as an anchor to secure private money. Nevertheless, there is a disruptive change taking place in the payments industry right now. According to the co-authors, people tend to pay with digital currency rather than cash, which is both convenient and potentially risky.

The euro’s trustworthiness and global significance might be jeopardized if people stop using public money as payment. The lack of a firm monetary basis in a digital payments environment would lead to uncertainty about what constitutes money.

Then there’s the risk of a few private sector players dominating the market. Non-European businesses might gain a monopoly on the European payments market if big internet firms utilize their vast client bases to grow swiftly and engage in market-abusive conduct, according to central bankers.

According to the ECB president and board member, this is why the bank started the digital euro initiative a year ago. EU residents will be able to have confidence in their digital payments if the euro is introduced as a digital currency. Additionally, it is hoped that it would safeguard the independence of European payments and increase the efficiency of the overall payment system.

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