{"id":180898,"date":"2023-09-04T21:39:53","date_gmt":"2023-09-04T21:39:53","guid":{"rendered":"https:\/\/precoinnews.com\/?p=180898"},"modified":"2023-09-04T21:39:53","modified_gmt":"2023-09-04T21:39:53","slug":"digital-euro-can-ward-off-a-host-of-private-payment-service-ills-ecb-official","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/crypto\/digital-euro-can-ward-off-a-host-of-private-payment-service-ills-ecb-official\/","title":{"rendered":"Digital euro can ward off a host of private payment service ills: ECB official"},"content":{"rendered":"
The European Central Bank (ECB) is quite happy with the European Commission’s (EC) legislative proposals for the digital euro. ECB executive board member Fabio Panetta told the European Parliament\u2019s Committee on Economic and Monetary Affairs in a speech on Sept. 4 that the proposals \u201cput Europe at the forefront of advanced economies\u201d in CBDC development, potentially heading off private dominance of the financial sector and the ills that implies.<\/p>\n
The EC made its proposals public on June 28. Panetta, a critic of cryptocurrency, called the EC proposals for the euro central bank digital currency (CBDC) \u201ca new paradigm for preserving monetary sovereignty\u201d that would ensure Europeans always have access to a public payment option, whether it was cash or digital, even as \u201cclosed-loop solutions are becoming increasingly prevalent\u201d in private payment services. Panetta compared private payment systems to private messaging, where users are pressured to join the most popular systems.<\/p>\n
The EC proposed giving the digital euro the status of legal tender, making its acceptance for payment mandatory. Panetta also praised the EC\u2019s privacy proposals for the digital euro. He specified:<\/p>\n
\u201cThe Eurosystem would be unable to see the personal details of digital euro users or connect any payment information to private individuals. Intermediaries would only see the user information needed for onboarding and compliance with existing regulation.\u201d<\/p><\/blockquote>\n
\u201cFurthermore, the possibility to pay offline would provide cash-like privacy, with neither the intermediary nor the central bank processing the payment,\u201d Panetta said.<\/p>\n
The proposals also included reasonable pricing policies and allowing the ECB to maintain equilibrium in the financial systems with tools like holding limits. Panetta said:<\/p>\n
\u201cLet me emphasise, once again, that the issuance of a digital euro represents an opportunity, not a risk, for the European financial sector.\u201d <\/p><\/blockquote>\n
The alternative to introducing a CBDC is not maintaining the status quo. Rather, it is losing ground to new private solutions that could impact the economy, Panetta said. He held PayPal\u2019s recently introduced PYUSD stablecoin up as an example of potential risk.<\/p>\n
Related: EU finalizes controversial smart contract kill switch rules under Data Act<\/em><\/strong><\/p>\n
Private payment service providers seek to gain market share and have no motivation to restrict their range of services or make them compatible with other services. As a result, a private service could attain a monopoly position on the market, as has happened before, Panetta explained. <\/p>\n
In contrast, the digital euro \u201cwould pay due attention to orderly adjustments in the financial sector while offering payment service providers a platform for innovations with pan-euro area reach,\u201d he said. <\/p>\n
Magazine: How to control the AIs and incentivize the humans with crypto<\/em><\/strong><\/p>\n