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Members of the European Parliament (MEPs) have called on the European Central Bank (ECB) to delay the “realisation” phase of the digital euro until the EU’s legislative package for it has been approved.
In a letter seen by Vixio, lawmakers write that “we find it neither necessary nor desirable to rush the implementation of this project prior to the comprehensive discussion on the outstanding issues”.
Signed by MEPs from the eurosceptic European Conservatives and Reformists faction and centre-right European People's Party, the letter highlights uncertainties with the digital euro and the process that will eventually see it issued in the eurozone.
"The development of such a critical monetary instrument necessitates a high degree of democratic scrutiny and legitimacy through public oversight,” the MEPs write.
The MEPs include Michiel Hoogeveen (ECR) and Markus Ferber (EPP), who have in the past both expressed scepticism about the need for a digital euro.
The ECR also released a separate statement from one of the co-signatories, Johan Van Overtveldt. In it, the Belgian MEP criticised the digital euro as “a solution in search of a problem”.
“Given all the uncertainties, we call for the introduction of a digital euro not to be rushed. Too little is currently known about its impact,” said Van Overtveldt.
“The central bank cannot afford to launch a half-finished currency, let alone interfere in the legislative process.”
Open questions
"There are still many open questions that need to be addressed and resolved," the MEPs write, adding that public hearings with the ECB have failed to answer these.
The costs that the digital euro system could impose on retailers obliged to accept it, and for banks that would have to provide the infrastructure without levying fees on users, are among the issues raised by the parliamentarians.
“The added value of the digital euro as a payment system for the general public remains unclear,” the MEPs warn.
“The payment advantages it may offer largely overlap with the capabilities provided by the combination of cash and existing financial payment systems which are continually evolving, bolstered also by recently adopted European legislation.”
In addition, the lawmakers state that the monetary and technological implications of the digital euro for the financial sector remain mostly uncertain at the moment.
“We firmly believe that it is essential to facilitate an open debate on these matters during the upcoming negotiations on the Digital Euro package,” they say.
Sources in Brussels have for some time anticipated that the European Parliament is likely to be disruptive regarding digital euro legislation.
For example, more than one source told Vixio last week that they expect the project will be canned.
Another source told Vixio that the ECB’s project could lose momentum with the departure of its leader, Fabio Panetta.
Panetta will leave the ECB to take up a role as governor of the Bank of Italy in November this year.
The source said that they think it will be hard to find another spokesperson in favour of the project. “Without him, I have no idea who will take the lead,” the source said.
The source added that some national central banks, such as the Banque de France, also lack enthusiasm for the project.
“Banque de France identified early on that there was more future in the EU for a wholesale CBDC than a retail CBDC,” the source said.
