{"id":265308,"date":"2021-06-03T04:07:36","date_gmt":"2021-06-03T01:07:36","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/ecb-says-digital-euro-may-be-needed-to-combat-artificial-currencies\/"},"modified":"2021-06-03T04:07:36","modified_gmt":"2021-06-03T01:07:36","slug":"ecb-says-digital-euro-may-be-needed-to-combat-artificial-currencies","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/ecb-says-digital-euro-may-be-needed-to-combat-artificial-currencies\/","title":{"rendered":"# ECB says digital euro may be needed to combat ‘artificial currencies’"},"content":{"rendered":"

“# ECB says digital euro may be needed to combat ‘artificial currencies’ <\/strong>”
\n<\/p>\n

The European Central Bank has warned that a CBDC or digital euro may be required to head off the spectre of \u201cartificial currencies\u201d dominating cross-border payments. <\/p>\n

In ECB\u2019s annual review of the euro dubbed \u201cThe international role of the euro\u201d, economists Massimo Ferrari and Arnaud Mehl conveyed concerns over the rise of artificial currencies led by unnamed \u201cforeign tech giants\u201d \u2014 likely a veiled reference to Facebook<\/a>\u2019s Diem project: <\/p>\n

\u201cOne concern could be a situation in which domestic and cross-border payments are dominated by non-domestic providers, including foreign tech giants potentially offering artificial currencies in the future.\u201d <\/p><\/blockquote>\n

\u201cNot only could this threaten the stability of the financial system, but individuals and merchants alike would be vulnerable to a small number of dominant providers with strong market power,\u201d the pair added.<\/p>\n

The ECB has long-held concerns over the rise of artificial currencies or stablecoins in Europe and previously asked EU lawmakers for veto powers regarding private stable projects such as Facebook\u2019s Diem coin. <\/p>\n

The ECB has taken a careful app<\/a>roach to launching a digital euro, with ECB\u2019s president Christine Lagarde noting in January that \u201cit\u2019s going to take a good chunk of time to make sure it\u2019s safe,\u201d and adding, \u201cI would hope that it’s no more than five years.\u201d <\/p>\n

Ferrari and Mehl\u2019s report on \u201cCBDC\u2019s and global currencies ” weighed up \u201cseveral scenarios in which the need to issue a digital euro\u201d may become important. <\/p>\n

The economists emphasized the need to compete with big tech firms for payment products and services, and noted that bundling a digital euro with complementary services could be a way to do so: <\/p>\n

\u201cA CBDC could facilitate the digitalization of information exchanges in payments through e-invoices, e-receipts, e-identity, and e-signature, allowing intermediaries to offer services with higher value-added and technological content at lower cost.\u201d<\/p><\/blockquote>\n

According to the report, deploying the digital euro may also be needed to enhance current cross-border payment infrastructures. The authors notes that a digital euro could negate the need to use foreign currencies for international transactions, and reduce the costs associated with doing so, which in turn would \u201cfacilitate an expansion of global e-commerce\u201d:<\/p>\n

\u201cLow transaction costs and bundling effects could increase its appeal for invoicing cross-border transactions \u2014 as a means of payment and as a unit to settle current transactions.\u201d<\/p><\/blockquote>\n

The report also stated that the \u201cspecific design features of a CBDC would be important for its global outreach,\u201d and emphasized the need to incentivize the use of a digital euro through interoperability, the anonymity of users, and being able to conduct offline payments. <\/p>\n

However, the economists stressed that anonymity would also have to be tempered with the need to have enough information on CBDC users in order to \u201cbuild safeguards\u201d and identify misuse of funds for terrorism financing, cross-border criminal activities, and money laundering.<\/p>\n