The Governor of Spain’s central bank, Pablo Hernandez de Coz says there is no urgent desire among users in the jurisdiction for a Central Bank Digital Currency (CBDC), explains the digital euro’s roadmap.
In a recent speech at the Annual Convention of the Associacion de Mercados Financieros, Madrid, the central bank Chief said the desire to float the digital euro was borne out of three main factors; complementing cash use in the region, innovation of present payment systems and driving monetary autonomy.
According to him, considering present market dynamics, a digital euro is important but not a pressing necessity and this can be seen from consumer behaviour.
Despite the growing use of digital payments and a decline in cash transactions, users have expressed concerns with digital currencies replacing cash although it has been properly explained as being overblown and without merit.
A recent study places the use of digital methods at 55% however 60% of the population requires cash as a viable option for many reasons leading to authorities stressing that the CBDC would aim to complement cash with other benefits and not replace it.
On the part of regulators, he added that a CBDC should be rolled out in a manner to prevent forms of financial instability and aid monetary policies.
Benefits of a Digital Euro
Hernandez de Coz highlighted the hallmark of the digital euro which paves the way for a free, widely acceptable form of payment for all transactions either person-to-person or to governments.
The design includes an offline model without internet settling transactions all year round with high functionalities to control spending while preserving the privacy of users.
A major benefit of the digital euro is the ability to spur development in the Eurozone financial sector, particularly with its underlying technology. The digital currency would serve as a platform to reach domestic and regional payment objectives instantly.
With the development of private cryptocurrencies and CBDCs in other regions, a digital euro is needed for strategic autonomy to cut dependence on private issuers.
“European banks and payment service providers have long worked to reduce this dependence, and the European Payments Initiative (EPI) is one of several promising projects in this connection. The digital euro may also contribute to this objective, offering an additional alternative and even facilitating private sector endeavours by developing standards it can leverage.”
Potential risks for many consumers
Aside from the view that cash may become extinct which has been explained by authorities, the privacy factor remains a major concern because the central banks would work with private payment firms with access to multiple information.
Europe’s Data Agencies Express Concerns Over Privacy Standards with The Digital Euro
The European Union data protection agencies have flagged possible areas concerning user privacy exposures of the proposed digital euro.#CryptoNewshttps://t.co/7ngLjFXP45
— Cryptonews.com (@cryptonews) October 18, 2023
On the part of central banks, anti-CBDC users claim there are risks of centralized citizen control with authorities determining the behaviour of the people.
The deposit concern was also discussed requiring limits on the amount of digital euro an individual may hold. While praising the interim design, the regulator added that collaboration with regional and global counterparts is key for a perfect execution.
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