The popular representative for banks, the European Banking Federation (EBF), issued a well-structured report on March 28 outlining the roadmap for digital money. The report projected the market performance for digital money in the long run.
In particular, the report focuses on the benefits and setbacks of battling the digital Euro in the banking sector. The EBF report mentions the digital Euro characterization, which included stability, security, and privacy.
Importance of Improving the Value of Digital Euro
The EBF team analyzed the risk, threats, and opportunities of the digital Euro to gather crucial information necessary for laying out the end goal. The report stated that the EBF team has no plans to hold talks to evaluate the risks associated with monetary policy and the existing financial system.
A review of the EBF vision demonstrates the importance of the private sector to the European markets. The team outlined strategies to reduce the overdependence of foreign investors.
The EBF urges the regulators to prioritize the development of the digital Euro and central bank digital currency. The team revealed plans for financial institutions to issue digital tokens.
The EBF believes the wholesale CBDC will operate on distributed ledger technology (DLT). The interoperability features will expedite cross-border transactions using the central bank’s digital fiat currency.
Features of the EBF Proposal
The EBF formulated strategies to improve the usability and security of the digital Euro. The EBF team tasked the digital Euro with three main roles, two in the industrial sector and one in the European central bank.
The digital Euro will complete payment within the Single Euro Payments Area (SEPA) more seamlessly. Additionally, at the industrial level, the private sector is tasked to orchestrate the operation of the sector. The EBF plans to formulate the principle that will guide the investors in the private sector to uphold compliance.
However, the European markets lack clarity on demonstrating how policies interact. The regulators must invest in formulating more transparent policies to enable the investors to make informed decisions that will generate positive outcomes.
The EBF team argued that the existing Pan-European payment method commonly used in closing sale deals must be amended to meet market needs. The EBF team considered the tokens issued by the bank as a focal point toward the realization of the proposed objectives.
The team argued that the revolutionary technologies used in developing bank-issued tokens perfectly meet the market needs. They restated that the tokens garner enormous potential in automating industrial processes through the smart contract approach.
Still, the regulators are required to take policy-related action for the standardization of current policies. The report mentioned the benefits of blockchain technology with some specific envisioned ecosystems.
In the meantime, more than 33 national banking associations constituting 3500 banks have registered with the EBF.