- During the conversation, the ECB president mentioned that the digital euro will have a “limited amount of control.”
- Specifically, Lagarde discussed the possibility of having zero control for small amounts, such as below €300 or €400.
- The digital euro decision is expected to be made in October.
Recently, a video prank call posted online last month featured ECB President Christine Lagarde, who unwittingly revealed information regarding Europe’s central bank digital currency (CBDC), the digital euro. In the call, a prankster impersonating Ukraine President Volodymyr Zelensky had a conversation with Lagarde.
During the conversation, she mentioned that the digital euro will have a “limited amount of control.” Specifically, Lagarde discussed the possibility of having zero control for very small amounts, such as €300 or €400. She noted that this could be dangerous. Citing a previous terrorist attack in France that was believed to be financed by rechargeable and anonymous credit cards.
CBDC discussion rages
The discussion surrounding CBDCs and their potential impact on global finance has grown significantly in recent years. While some see CBDCs as a way to modernize and streamline financial systems, others are concerned about government overreach and privacy issues. Robert F. Kennedy Jr., a recent Democratic candidate for U.S. President in 2024, shared his concerns about CBDCs on Twitter. Noting that a CBDC tied to a digital ID and social credit score could allow governments to freeze assets or limit spending to approved vendors for non-compliance with arbitrary diktats like vaccine mandates.
The digital euro decision is expected to be made in October, and at least 114 countries are currently exploring CBDC developments, according to the Atlantic Council. Additionally, the European Union introduced new cash payment limits of €7,000 (US$7,645), with lower caps in some member states and restrictions on anonymous crypto asset transfers over €1,000. The revelations from the prank call with Lagarde highlight the potential risks and benefits associated with CBDCs. It will be important to carefully consider these issues as the conversation around digital currencies continues to evolve.
The Road to the Digital Euro
The European Central Bank (ECB) has been exploring the possibility of launching a digital euro, and there have been several recent developments in this area.
In July 2021, the ECB launched a two-year investigation into the potential launch of a digital euro. The investigation will assess the risks, benefits, and technical challenges of introducing a central bank digital currency (CBDC) in the eurozone.
In September 2021, the ECB published a report outlining the preliminary design choices for a digital euro. The report suggests that a Euro could be issued in two forms: one for retail transactions and one for wholesale transactions between financial institutions.
The report also proposed several features for the digital euro, including anonymity, offline usability, and interoperability with existing payment systems. The ECB emphasized that a digital euro would complement cash, not replace it.
In addition, the ECB conducted a public consultation on the digital euro in October 2021. The consultation sought feedback from the public and stakeholders on various aspects of the digital euro, such as its design, usability, and potential impact on the financial sector.
The idea of a digital euro has both supporters and sceptics. Proponents argue that a CBDC could provide a secure and efficient means of payment, reduce the costs of cross-border transactions, and offer greater financial inclusion to those who currently lack access to traditional banking services. Sceptics, on the other hand, raise concerns about privacy, and data security. There is also the potential for digital currencies to displace cash and undermine monetary sovereignty.
It is clear that the ECB is taking a cautious and deliberate approach to the potential launch of a digital euro. While the benefits of a CBDC are intriguing, the ECB will need to carefully assess the risks and potential implications before making any decisions. It remains to be seen what the future holds for the Euro CBDC plans. The conversation around digital currencies is only just beginning.
CBDC concerns validated
One of the biggest arguments against CBDC has been the issue of control. Governments and financial authorities may use CBDCs to control the flow of money. All is well and good if this is for the purpose of protecting the public interest. However, there is the possibility of serving their own interests.
Story Courtesy of Web3Africa