Fabio Panetta recently announced that the European Commission is set to issue a new regulatory framework proposal for the potential digital euro by June. Panetta, who is a member of the European Central Bank’s Executive Committee added that further decisions on the proposal would be announced in October.
According to the report, Fabio Panetta stated in a recent interview that the European Commission is collaborating with the eurozone bank to draft a regulatory framework for the commission’s digital euro. The digital euro would reportedly be the Central Bank Digital Currency for all the 27 nations under the EU.
Panetta revealed that the commission is currently examining the design, distribution, and financial impact of the proposed digital euro. He added that the proposal the commission plans to submit in June would have to be revised by the European central bank’s governing board.
After the board’s revision, they would then decide whether or not to start a preparation stage to create and test the digital euro. And according to the executive, testing the European CBDC might take up to three years to complete.
Panetta Shares The Risks and Benefit Of CBDC
Furthermore, if the procedure unfolded smoothly without any glitches, and the governing board of the European central bank as well as the policymakers of the European Parliament nod positively to the proposal, Panetta estimated that the digital euro would be issued in the next three to five years.
During the interview, Fabio Panetta shared his opinion on the potential risks and benefits of the digital currency. The executive pointed out that there is a need for a risk-free digital form of payment settlement that can be used voluntarily across all the European nations, while at the same time protecting the users’ funds and privacy.
Panetta claimed that a currency that offers such a solution does not exist yet. He stated that the card payment model is majorly popular among non-European firms such as Visa and Mastercard. In addition, he added that such a solution does not even exist and is quite unrealistic within the United States. He also voiced his opinion and concerns about firms that share or sell customers’ information.
In his speech, the ECB Commission executive emphasized how crucial it is for central bank currency to remain at the very heart of the nation’s financial system. Furthermore, he pointed out that the rapidly increasing adoption of cryptocurrency assets such as Bitcoin, is giving government entities like the ECB a lot of concerns.
Regulators To Balance Between User Privacy And Fund Security
Talking about users’ data privacy, Panetta declared that the European Central Bank does not plan to have access to the data of users. He added that the distribution of the digital euro would be manned by financial intermediaries.
In addition, he pointed out that the government needs to strike a balance between maintaining users’ privacy and ensuring a constant fight against terrorist financing and money laundering. Panetta said that the policymakers are saddled with the responsibility of finding and maintaining this balance.
Meanwhile, statistics have shown significant growth in the number of countries showing interest in the Central Bank Digital Currencies (CBDCs) concept. Many of these firms are already exploring the potential benefits, risks, and use cases of their various digital currencies.
Furthermore, some countries have already launched their CBDC, such countries included Nigeria and the Bahamas. Also, some countries like Japan and China are already in the pilot phase of the project.
