The European Union’s elected lawmakers seem skeptical about the point of issuing a central bank digital currency (CBDC) as the bloc prepares to make key decisions on a digital euro in the coming months.
During a Wednesday debate, members of the European Parliament raised concerns over privacy, state control and the role of banks, and some are starting to wonder if the project is worth pursuing at all.
“There's one central question which hasn't yet been credibly answered, which is what is the added value …. What can I do with a digital euro that I can't do with current payment options?” asked Markus Ferber, economic spokesperson for the center-right European People's Party. “As long as there's no answer to this question, there's going to be a great deal of skepticism.”
That view appears to be shared by some in the center-left Socialists and Democrats grouping, the next biggest in the chamber.
“The question we have to ask is why are we doing it, and with what goal,” said French lawmaker Aurore Lalucq. “We're jumping onto the digital bandwagon because it's fashionable, and trying to deliver it with forceps … I think you need to be extremely careful.”
The European Central Bank (ECB) is set to make a formal decision about whether to issue the digital euro later this year. But officials are keen to gain lawmakers' consent for any legislation that would be needed to accompany the CBDC.
“If we don't provide our own solution, then we run the risk of private stablecoins or foreign central bank digital currencies filling the gap,” the European Commission’s Mairead McGuinness told lawmakers, adding that “a digital euro could support more innovation and payments such as machine to machine payments.”
McGuinness, the commissioner responsible for financial services policy, is due to publish a bill next month that she said will cover the euro’s status as legal tender, the compensation that private operators would receive for distributing the currency and privacy – an issue that topped a 2021 ECB poll of public concerns about the plans.
“This is not a ‘Big Brother’ project,” McGuinness said. “We should not address this issue to citizens in this chamber as any sense of a project of control … it's a project of choice.”
Some lawmakers, concerned that private-sector projects like the now-abandoned Facebook libra stablecoin could usurp the role of central banks, may be swayed by those arguments. Others are worried about the authoritarian implications of greater state control.
“I was told that we need this so we can compete with China,” said Michiel Hoogeveen, a Dutch lawmaker from the right-wing European Conservatives and Reformists Group. “Back in the day, we would counter Communist China with policies of rollback or containment, not by copying it.”
Others said they were concerned the ECB is under the thumb of bank lobbyists, and that planned restrictions such as caps on holdings could unduly clip the CBDC’s wings.
“Some of the existing interests which fear the disruptive impact of the digital euro are trying to hamper the design,” said Ernest Urtasun of the parliament’s Green grouping. “What's crucial is the development of this project. We cannot leave it in the hands of the ECB and the technical advice that they have, which is coming from the private banking sector.”
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.