Fabio Panetta, a member of the European Central Bank’s (ECB) executive board, stated in an opening statement before the Committee on Economic and Monetary Affairs of the European Parliament that the preliminary phase of the project for the digital euro started more than a year ago and that the Europen Parliament’s involment was ECB’s top priority.
He asserted that they routinely reviewed the primary technical alternatives considered by this Commission till 2022. He expressed gratitude to private participants for their up-to-date regulatory suggestions and industry knowledge.
“These interactions are essential to ensure that public money (the money issued by the central bank) responds to the preferences and needs of citizens and businesses in an ever-changing digital environment.”
According to Fabio, the share of cash payments in the Europe has dropped from 72% to 59%, while digital payments have increased. Only one-fifth of transactions, for instance, take place in the Netherlands and Finland using cash. At the same time, residents want to be able to make purchases using government funds. The majority of them believe it is crucial or highly crucial always to have this option available.
A digital euro would give European people access to a free payment method that would enable them to make payments anywhere in the euro region in addition to cash. The ECB board member claimed that the digital euro would meet the rising demand for electronic payments by making public funds accessible in digital form. He said that the use of the new digital currency would be encouraged by its accessibility and convenience while increasing financial inclusion.
The administration emphasized critical public goals, including the battle against money laundering, terrorism financing, tax evasion, and compliance with any sanctions.
Researchers had previously suggested a supervised intermediary technique for the digital euro in place of a direct-to-central bank mechanism.
The ECB thinks that supervised intermediaries are best positioned to identify use cases for contingent payments and other advanced payment services.
Alternatively, the ECB may permit private banks to act as middlemen and integrate the digital euro into their own systems. The idea of the digital euro skipping blockchain technology altogether floated last year.
According to Fabio Panetta, the European Commission will also present its legislative proposal addressing the currency this year. But as the CEO said, the apex bank would keep looking into the currency throughout the year.