Digital Euro Will Never Be Programmable, ECB’s Panetta Says
Some observers have touted restrictions on how people can spend their money as an advantage of a central bank digital currency.
The digital euro will never be programmable, according to Fabio Panetta, an executive board member of the European Central Bank.
In remarks made to lawmakers Monday, Panetta indicated the putative central bank digital currency won’t allow restrictions to be placed on how funds can be spent.
“The digital euro would never be programmable money,” he told members the European Parliament’s Economic and Monetary Affairs Committee. “Central banks issue money, not vouchers.”
The ECB is currently one of around 100 central banks investigating a central bank digital currency, and is due to consider whether to go ahead later this year. Some observers have touted as an advantage the ability to limit onward use of a digital currency – for example as food stamps that can be spent only on essential goods, or paying taxes automatically. Others, including euro area finance ministers, are opposed, saying the ability to be programmed would override the function of money as a fully fungible asset.
There could be a single digital euro app to provide a “homogeneous look and feel” across the 20 nations using the currency, and it could also be integrated into existing proprietary banking apps, Panetta said.
Panetta also said the digital euro may not run on decentralized technology that underpins crypto assets such as bitcoin (BTC).
"The views of many experts is that blockchain technology may not have sufficient power to be used to run such a huge system," he said. "We are still discussing this."
Panetta's statement generated an immediate backlash from lawmakers influential in the crypto field.
"If it’s not programmable , how’s it going to be attractive for users?" asked center-right lawmaker Stefan Berger, who shepherded the EU's Markets in Crypto Assets law through the European Parliament. "What is its use ... what is the added value?"
That view appeared shared by center-left lawmakers, too, who noted that more complex technology could allow central banks to make direct payments to citizens as an innovative form of monetary policy.
"If you say you don't want programmable money, that also doesn't allow for helicopter money," Dutch lawmaker Paul Tang told the Committee, referring to the possibility of direct payments to citizens. "I'm a macroeconomist, I still dream of that possibility."
UPDATE (Jan. 23, 16:35 UTC): Adds comment from Paul Tang.
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