On May 17, Fabio Panetta, a Member of the European Central Bank (ECB) Executive Board clarified doubts related to the digital euro. During the Kangaroo Group virtual debate, Panetta shared her views on the digital euro and its related queries.
The ECB official has discussed various terms related to the digital euro. For those who are not aware, the digital euro is central bank money for digital retail payments by citizens, companies, and governments in the entire European region. The launch of the digital euro will provide several advantages as it will allow users to pay digitally everywhere in the European area. It will protect the function of public money as a monetary anchor for the financial system through the evolution of cash in the digital era. Additionally, it will also provide a European platform for innovation while facilitating intermediaries to develop services for their customers. The digital euro services will be instantly available across Europe.
According to Fabio Panetta, the digital euro will complement fiat not substitute it. Also, the digital euro will never be programmable money. Various supervised intermediaries like banking institutions and payment service providers will be responsible for the distribution of digital euros. Offering user-facing services, such as opening wallets or accounts, payment instruments, onboarding, and offboarding, including know-your-customer and anti-money laundering checks, would be among their duties. The monetary authority of the eurozone is called the Eurosystem, which is made up of the ECB and the national banks of the 19 nations that use the common currency.
In a recent speech, Fabio Panetta emphasized the privacy of financial inclusion through the adoption of the digital euro. Additionally, when the consultation paper for the public suggestions was made public the primary concern for them was privacy. To tackle the privacy issues, the ECB will collaborate with the European Data Protection Supervisor to ensure that the digital euro provides the highest possible level of privacy.
It will be beneficial in financial inclusion as it will facilitate users to be accessible throughout the European region. Additionally, it is free for basic usage and will be available offline. The ECB’s two-year research into a central bank digital currency (CBDC) will come to an end in October 2023, at which point EU leaders will decide whether to introduce one. It is yet to witness the actual benefits of the digital euro but the authorities are trying every possible safety measure to ensure sustainability.