ECB refuses any concerns over digital euro
The directors of the European Central Bank published a blog defending the motivations behind a digital Euro.
Two weeks ago, that reported on a Commerzbank podcast that assured the real motivation behind introducing a central bank digital currency (CBDC), would be a desire by the ECB to extend its influence. Hence, the blog that was published may not be a coincidence.
In the blog, ECB directors told that no decision has been made yet to proceed with a digital euro. They hope to clear misconceptions to abort cash and impose negative interest rates. The blog also states that there is no urge to replace commercial bank interruptions.
The directors said that as long as there is cash, people can continue to hold an interest rate that is equal to zero. Hence, even if the digital euro is introduced, the citizens cannot make it worse.
The Commerzbank economist Dr. Jorg told that a digital euro will accelerate the cash decline. Although he is correct that it will make it harder to use in day-to-day lives, it doesn’t prevent citizens from holding cash and storing it as a value.
Regarding the bank disintermission point, the directors told that there are strong bank options for intermediate credit. And they have already highlighted the designs that could clear the digital euro risk which is used as a value store.
Despite all this, ECB Directors say that the digital currency might leave Europe open to its payment system that is dominated by non-European providers.
Additionally, more observations to this, Commerzbank has been one of the innovative banks when it comes to blockchain payments. Hence, there is a possibility that they want to protect this potential competitive advantage.
Also, there has not been the same push from the big banks in the U.S. But, that is because the banks are pushing with their plans, especially banks like JP Morgan. Forget about U.S. digital dollars in U.S. banks that may want to be entrenched by the time the government produces a digital currency.
Contrary to that, there is a perception that ECB might move quickly. The ECB President has told that by 2025 some parts will be digital euros.
An investment bank recently published a thought-provoking paper with concepts on the motivation behind a digital euro.