The European Central Bank (ECB) is carefully assessing the potential consequences of a digital euro on the region’s banking framework.
During a recently disclosed speech on the Bank of Spain’s official website, Margarita Delgado illuminated two crucial facets of the current financial landscape. Firstly, she emphasised the burgeoning trend of digital transactions, stressing the importance of ensuring that European citizens retain the ability to utilise central bank-issued funds in an increasingly digital environment.
Additionally, she highlighted that as digital assets gain prominence, a digital euro could be pivotal, serving as a pan-European payment method deeply rooted in European infrastructure.
However, the potential advantages of such a digital currency must be balanced against potential risks to the eurozone’s banking system’s stability. Bank of Spain deputy governor Margarita Delgado said, “The issuance of a digital euro should not be in detriment to the stability of the financial system.” Elaborating further, she remarked, “we cannot ignore the elements that might impact the competitiveness and profitability of the banks.”
Financial stability emerged as a recurring theme throughout Delgado’s discourse. She elucidated, “We are committed to finding the right balance between safeguarding our financial system and making sure the digital euro adequately covers the needs of the users.”
In the coming month of October, the ECB is slated to finalise its decision concerning the continuation of the digital euro initiative.
The narrative doesn’t solely revolve around a centralised digital currency. Delgado underscored the European Commission’s standpoint that a digital euro isn’t envisaged as a replacement for physical cash but a complementary instrument. Echoing this sentiment, she elaborated, “Our aim is to design a basic means of payment. It will be up to the intermediaries to add on it by building value-added services, if they so wish. Ultimately, a digital euro should stimulate innovation, foster competition and enhance resilience in the European payments market.”
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