Digital Euro Debate Heats Up: Experts Divided on Central Bank Digital Currency
After a two-hour hearing regarding the potential issuance of a digital euro, expert testimony has done little to settle the continent’s legislative debate on central bank digital currencies (CBDCs).
Members of the European Parliament invited four expert witnesses to a hearing on Tuesday to elucidate the pros and cons of CBDCs while lawmakers reviewed legislative proposals on the matter.
Those experts, however, proved there is hardly any consensus around the most important questions on the topic, ranging from individual holding limits to whether a digital euro is necessary at all.
Italian economist Ignazio Angeloni, for example, said the arguments presented during the hearing would “not favor” a decision to issue a CBDC. He added:
“An invasive form of public intervention like this one would be justified only if clear evidence were to emerge of malfunctioning in the present system. But this is not in sight at the moment.”
Angeloni published a research paper on the implications of a digital euro in April, titled “Digital Euro: When in doubt, abstain (but be prepared).”
The paper argued that there still isn’t a clear “market niche” for a digital euro to establish itself in today’s competitive retail payment landscape. If there is, it may create an “adverse incentive structure” between retail banks and the digital euro since the latter may spur a run on traditional bank deposits.
The central bank has previously proposed a holding limit of roughly 3,000 to 4,000 digital euros per person to stem the issue. Though Angeloni suggested this limit may be insufficient, Vicky Van Eyck – another expert witness – was more optimistic.
“We have no interest in seeing the banking system crash,” said Van Eyck, the executive director of Positive
