HomeCBDCDigital Euro UpdatesThe Future of Finance: Exploring the Impact of the Digital Euro

The Future of Finance: Exploring the Impact of the Digital Euro

Fabio Panetta, Member of the Executive Board of the ECB, addressed the Committee on Economic and Monetary Affairs of the European Parliament to discuss the progress made in the digital euro project. The introduction of a digital euro would allow Europeans to use public money for digital payments, similar to how they use cash for physical payments. This is important for two reasons: to preserve the role of public money in the payments system and to contribute to Europe’s strategic autonomy and economic efficiency. The design of the digital euro aims to make it attractive to users and give it legal tender status. Privacy, financial inclusion, and fostering digital innovation are also key considerations. The implementation of the digital euro seeks to minimize time to market, costs, risks, and ecological footprint. Panetta also highlighted the potential impact of a digital euro on the financial system, emphasizing the need to prevent the substitution of excessive amounts of bank deposits with digital euro and to address risks to monetary policy transmission and financial stability. The design of the digital euro will include tools such as quantitative limits on individual holdings and tiered remuneration. The goal is to strike a balance between financial stability and the attractiveness of the digital euro. Panetta stressed the importance of collaboration between public and private parties to create a pan-European digital payment solution and the role of financial intermediaries in distributing the digital euro. The introduction of a digital euro would contribute to an efficient monetary and payment system in Europe, strengthen strategic autonomy, and promote European-governed payment services. The regulatory framework for both public and private forms of money in the digital age will be crucial, and Panetta will continue to report on progress in the investigation phase.

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