Digital Euro on Hold: European Parliament Urges Research!
According to recent news, A European economist found that the digital euro with a solution is a problem. He recommended waiting and watching.
European Parliament committee released an analytical paper on Monetary and Economic Affairs. This committee gives mixed reviews of the digital euro. The title “Digital euro: when in doubt, abstain” summarizes its position.
Key Takeaways:
- European Parliament report suggests waiting before launching the digital euro, citing mixed reviews.
- Potential issues with the digital euro include competition with commercial banks and a lack of preparedness.
- Economist Ignazio Angeloni’s report warns that launching the digital euro without preparation may disrupt the ECB.
- ECB is to launch the testing phase for central bank digital currency in October, but the launch of the digital euro is not possible until certain elements emerge.
- Caution and collaboration are needed for the successful introduction of the digital euro.
Strawberry Angie News took to Twitter and announced the report of the European Parliament on the preparation state of the Digital euro. The report suggested that the Europeans not launch the digital euro.
Moreover, at the request of the parliamentary committee, an Economist named Ignazio Angeloni wrote this paper. This paper aims to assess the preparations for the inauguration of the digital euro.
Angeloni searched 10 issues and found information regarding the “prospective digital euro (PDE) would face” by focusing on its downside.
In this paper, Angeloni wrote regarding the competition between banks. He said for deposits, European Central Bank (ECB) is in the position of competing with the commercial bank due to the digital euro.
But if ECB collaborates with Commercial banks, it provides front-end services to the users of the digital euro.
Blackhat took to Twitter and made an announcement that new European Parliament reports suggested being aware of the Digital Euros. A European economist said the digital euro without a solution is a problem.
Let’s see what would happen if the digital euro launched without preparation. Angeloni found that the bank provides a designed compensation structure for the services, including adverse warrants and incentives. But the ECB report doesn’t provide regarding this.
Additionally, the digital euro launching resulted in a disruptive effect that the ECB unprepared for its inauguration. To find a customer base, a digital currency must be attractive enough.
But not so attractive that it undermined the system of banks. If Digital Europe pays interest, then it will manage separately from the cash rates interests. This encourages arbitrage operations.
Prawns took to Twitter and made an announcement that The Economist found that digital without a solution has a disruptive effect on the European Central Bank.
Angeloni ends this with the quotation of Christopher Wallet, a governor of the Federal Reserve Board of the United States. The governor said that central bank digital currency solves every problem.
He suggested that despite the critics on the exploration and perhaps of ECB, the testing phase of ECB is launching in October. But the launch of PDF is not possible until the elements emerge. In October, ECB will decide to continue CBDC research with the realization phase.