A report commissioned by the European Parliament questions whether the digital euro is “necessary”

A report commissioned by the European Parliament questions whether the digital euro is “necessary”


The digital euro is a great unknown for a good part of the citizens despite being one of the main projects that the European Central Bank has in hand (ECB), the ‘guardian’ institution of the currency that currently used by 20 countries of the Old Continent (Spain among them). The body chaired by Christine Lagarde began the process in 2021 to create a new version of the euro that, a priori, would coexist with its current version (cash and bank money). But whether the ‘digieuro’ ends up becoming a reality depends not only on the ECB, but also on the institutions of the European Union (EU) in charge of developing standards community. One of them is the European Parliament, which commissioned an expert to produce a report in which it analyzed the single currency in depth. A document that came to light last week and that includes harsh criticism of the CBDC European.

The euro He celebrated a quarter of a century of life on New Year’s Eve. Its introduction began on January 1, 1999, although the coins and the bills of the common currency did not begin to circulate until three years later.

“The euro has shown remarkable resilience and is popular” among EU citizens, celebrates Karl Whelan in a report commissioned by the Committee on Economic and Financial Affairs (ECON) of the European Parliament. This came to light last week, a few days before the president of the ECB, Christine Lagarde, I will be one with said committee.

The document signed by Whelan, titled The euro at 25 years and what awaits the ECB?also highlights that the community currency “Has survived” even though “many thought” it “could come to an end in the early 2010s,” when it occurred the debt crisis.

The currency, also known as the single currency, was created with the aim of all EU states using the same money, as part of the integration of their different economies. Nevertheless, There are still seven countries that have their own currencies: Bulgaria, Czech Republic, Hungary, Poland, Romania, Sweden and Denmark.

He Professor of Economics at University College Dublin, who has also worked at the former Irish central bank and the US Federal Reserve (Fed), not only looks back in his analysis. The report (which can be consulted here in English) also addresses the digital euro project on which the ECB is already working. In fact, this is located in the second phase (of which it is not known how many) since last November.

“It is not clear what the problem to be solved is”

“The ECB has dedicated a lot of time and effort to preparing the introduction of a digital euro,” considers the university professor, who states bluntly: “I am not convinced that this project is necessary.”

“The debates of the ECB and from many other central banks about central bank digital currencieslike the digital euro, and I’m still not sure it’s worth it worry about them,” says Karl Whelan in his analysis.

“I am not convinced that this project is necessary”

This expert admits that the ECB must promote the proper functioning of payment systems and that, therefore, the modern version of the euro “could be justified on this basis.”

“However, it is not clear what problem the digital euro is a solution for,” continues the economist.

However, the former Fed employee advises the ECB that, “until the economic arguments in favor” of the CBDC are clarified, it should leave the idea in a drawer: “I think it is a project that should remain in the planning phase“.

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