Digitalization is the way forward, and the European Central Bank has found the key: a digital Euro. In development since 2021, the planned digital Euro will help fast-track the region’s shift towards safer and more convenient online payments. Like cash, the ECB envisions its digital currency as widely accessible, risk-free, and free to use. However, the road to Euro’s digitalization has been paved with politics and controversies.
Politico reports that some European Union governments are reportedly expressing concerns over the ECB’s regulation of the digital Euro. In its report, Politico said there’s an ongoing “tug-of-war” between several EU governments, like Germany and France, and the ECB over the planned coin’s regulatory framework, particularly on how much digital currencies a citizen can hold in a wallet backed by the central bank. Both sides fear that it can destabilize the region’s banking system if the regulatory framework isn’t addressed.
Digital Euro: So What’s The Limit?
The heart of the digital Euro debates is the amount consumers can store in wallets backed by the central bank. Some technocrats and politicians worry that if there’s a higher limit, consumers may end up pulling huge sums of money from banks during a crisis, thus disrupting the stability of the banking system.
Others question the need for a cap on the wallets; they say such a move may violate personal financial freedom and give rise to a “Big Brother” scenario.
In short, the current debates around the planned digital Euro settle on one crucial issue: where does the ECB draw the line? Some observers and analysts say that many EU countries are now reacting to the ECB’s extensive control over the financial system. In the words of one diplomat, the current debate is simply about “power.”
