Panetta describes the digital euro as "a new paradigm for preserving monetary sovereignty."
Fabio Panetta, a member of the European Central Bank's (ECB) executive board, praised the European Commission’s legislative blueprint for the digital euro in a recent speech.
Addressing the European Parliament’s Committee on Economic and Monetary Affairs on September 4th, Panetta expressed approval for the European Commission's proposals, made public on June 28th.
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A key feature of the European Commission’s proposal is to accord legal tender status to the digital euro. This means that acceptance of the digital euro for payments would become obligatory.
During his speech, Panetta stated that the initiative positions Europe at the center of central bank digital currency (CBDC) development and counters potential problems arising from private sector dominance in financial services.
An outspoken critic of cryptocurrencies, Panetta, described the digital euro as "a new paradigm for preserving monetary sovereignty." He noted that the digital euro would guarantee public payment options for Europeans in an era where private payment systems often operate in closed loops, pressuring users to conform to the most popular platforms.
Panetta had particular praise for the Commission's privacy provisions, stating:
The Eurosystem would be unable to see the personal details of digital euro users or connect any payment information to private individuals. Intermediaries would only see the user information needed for onboarding and compliance with existing regulation.
Moreover, Panetta highlighted that offline payments would offer "cash-like privacy," as neither intermediaries nor the central bank would process such transactions.
The legislative blueprint also incorporates reasonable pricing mechanisms and tools for maintaining financial stability, such as holding limits. Panetta emphasized the positive implications for the European financial sector, asserting:
The issuance of a digital euro represents an opportunity, not a risk.
Panetta warned against the alternative of not introducing a CBDC, which would cede ground to private financial solutions that could negatively impact the broader economy. As an example, he cited PayPal's recent launch of its PayPal USD (PYUSD) stablecoin.
Panetta explained that private payment systems aim to expand their market share, often at the expense of interoperability, which can lead to monopoly-like situations. Contrarily, a digital euro would allow for "orderly adjustments in the financial sector" and serve as a base for payment innovations across the eurozone.
According to Fabio Panetta, the digital euro initiative not only consolidates Europe’s position in the global CBDC landscape but also safeguards against the pitfalls of privately controlled payment systems.
