European Union worries digital euro may hurt other currencies

The ECB representative gave a speech calling on other countries to think about the consequences of CBDC

12.12.2021 - 07:40

337

1 min

What’s new? Fabio Panetta, an executive board member of the ECB, gave a speech and announced his own CBDC. But Panetta is also concerned that the digital euro could displace weaker currencies in other countries, according to the European Central Bank's official website.

Link to Fabio Panetta's speech

What did Panetta say in his speech? Many countries are already developing their own CBDCs, so the ECB chief executive expressed his concerns. He said that the central banks should think about how residents of other countries will use their digital currency. Panetta also added:

“The digital euro could spread in other countries to the extent that it would crowd out local currencies, leading to a digital “euro-isation,” which could hamper the transmission of monetary policy and lead to financial instability.”

How does the EU want to stabilize the economy? During his speech, the chief executive made it clear that he is not satisfied with the number of foreign companies in the European financial sector:

“Two US companies handle more than a third of electronic payments, while another US operator dominates online payments.”

The European Central Bank believes that the digital euro will help keep the currency financially stable and reduce its dependence on US intermediaries.

Author: