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Why are bankers afraid of the digital euro?

2024-03-06 10:21:31Lifestyle SHKRUAR NGA REDAKSIA VOX

Why are bankers afraid of the digital euro?

For many experts, the digital euro will transform the way 341 million Europeans make payments, save and invest. But this "revolution" in the common currency is "anathema" for some.

In the coming weeks, the European Parliament will negotiate and vote on legislation for the digital euro, the new form of cash. This is an electronic retail payment instrument to be issued by the European Central Bank. As a form of money issued by a public authority, it would be made available free of charge to all Eurozone citizens for any digital payment.

According to its supporters, it will combine the privacy and security of cash with the convenience of digital transactions. To achieve broad access and innovation, access to the digital euro should be possible through a wide range of private and public intermediaries and use should be free for all consumers. However, the move towards such an attractive digital euro faces considerable resistance from the banking sector, which sees this new form of money as a direct threat to its central position in the monetary and financial system.

Experts, for their part, call on MEPs to resist the bankers' anti-competitive proposals and embrace a vision of a digital euro that serves the collective interests of Europeans.

They explain that already in the last two years, banks and their interest groups have developed an extensive and very effective lobbying campaign to minimize the impact of the digital euro on their business model.

Their strategy includes securing exclusive meetings with key policymakers, writing letters to the ECB, pushing for a digital euro that uses existing banking infrastructure and supporting strict usage limits.

But such restrictions, they say, undermine the digital euro's potential to offer a real alternative to bank deposits and banking services and to protect the privileged position of the banking sector at the expense of a level playing field and wider financial inclusion.

Bankers' claim that the digital euro will threaten financial stability is not borne out by empirical evidence, ignoring the ability of non-bank financial intermediaries to fill any gaps in the market.


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