The Deputy Governor of the Bank of Spain has proposed that the European Central Bank (ECB) undertake a full evaluation of the effects of the digital Euro on the euro zone’s banking system before setting a deadline for the currency’s launch.
Leveraging her position at the Bank of Spain and her expertise in the financial sector to construct a comment on the future of the digital Euro, Margarita Delgado highlighted the increase in the use of digital payments across Europe and the emergence of foreign CBDCs or stablecoins as the main reasons why a digital Euro could ensure the protection of the European economy.
“This is a reasonable rationale for the ECB to explore the use of the digital euro as a new payment system,” Bank of Spain’s Deputy Governor stated. “Nevertheless, financial stability is the goal of our activity and our responsibility and commitment, and consequently, we need to identify and measure the impact of the digital euro on our banking system before any final decision is made.”
As part of her evaluation, Delgado recommended that various tools should be implemented to avoid a destabilisation of the European financial system, such as the placing of limits on the amount of digital euros that customers can hold in their accounts.
However, Delgado also hurried to point out that there still needs to be a balance between safeguarding the financial system and making sure that the digital Euro addresses the users’ needs adequately, which could prove challenging for the ECB given the current economic climate.
This of course will be partly coordinated with the private sector, on which the Deputy Governor added: “Our expectation is that the digital euro enables the development of new pan-European payment and financial services by the private sector, making it easier to compete with non-European solutions. Ultimately, a digital euro should stimulate innovation, foster competition and enhance resilience in the European payments market.”
