The European Central Bank, or the ECB, has been exploring the possibility of launching a digital euro project till five years replenish existing central bank money. But given that high-ranking leaders such as ECB President Christine Lagarde have been largely positive about the outlook, officials of the German Bundesbank remained unconvinced.
In a new article for the Frankfurter Allgemeine Zeitung, ECB member Fabio Panetta and colleague Ulrich Bindseil tried to solve some of the Germans’ concerns are:
“By no means does the ECB plan to use the digital euro to collect significantly more negative interest rates. As long as there is cash, it will always be possible to keep it at a zero percent interest rate. “
Panetta and Bindseil’s comments were directly related to earlier Bundesbank proposals that the digital euro could be “catastrophic” for savers, and economist Richard Werner’s view that the ECB’s interest in the digital euro would rule out a decisive trade in taking deposits from commercial banks.
Nevertheless, Panetta and Bindseil argued that the shape of the digital euro could ensure that it did not compete with bank deposits, referring to earlier proposals to limit the digital holding ceilings for citizens. In particular, they emphasized the importance of the project in ensuring the financial autonomy and resilience of the euro area to overseas companies and other regional actors:
“We need to prevent European payment transactions from being dominated by providers outside Europe, such as global technology giants, who will offer art currencies in the future. […] By preparing for the digital euro, we are also ensuring Europe’s autonomy. This is a guarantee in case undesirable scenarios occur. “
Panetta and Bindseil’s emphasis is clear Long-term attempts by Facebook to launch a stable code secured by fiat currency. Meanwhile, economic powers such as China are already predominant well in advance of the game with the central bank’s own digital currency.
German Finance Minister Olaf Scholz recently criticized Diem’s proposal for a stable Facebook page, rebranded from its former name, Libra, as “wolf in sheep’s clothing. He reiterated that the German government “will not accept its entry into the market,” citing insufficient regulatory risks.