The e-euro is dead, but it doesn’t know it yet. The central bankers of the world are eager to release their own MNBC (central bank digital currency) to stem competition from Bitcoin (BTC) and decentralized cryptocurrencies. But according to Swiss academic experts, the future digital euro of the European Union will already be doomed to deatheven before its launch.
The digital euro will face several obstacles to adoption
While they are fiercely critical of Bitcoin and cryptos, central bankers are very fond of their technologies in order to exploit them to issue a MNBC. This is particularly true of the European Central Bank (ECB), which would like to have a digitized version on blockchain of the single currency, theeuro.
On the other hand, this digital euro may not have the destiny the ECB had in mind. At least, this is the opinion of two professors at theUniversity of Berne (Switzerland). In a paper published on August 10, 2023 on the website of the Centre de recherche économique et politique (CEPR), the two experts consider that « the digital euro could be dead before it arrives ».. Already, because commercial banks – intermediaries between the ECB and private individuals – could have no interest to distribute this e-euro.
« Regulated financial intermediaries will be responsible for rolling out the digital euro. This raises a serious conflict of interest: a substantial part of banks’ profits comes from offering payment services (17% of banks’ total revenues came from payments in 2017). (…) Banks therefore have no interest in seeing the digital euro alive and well. (…) «
Extract from the report
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Citizens will have only « limited confidence » in this MNBC
Bernese professors Cyril Monnet and Dirk Niepelt go even further, and speak of a serious confidence problem of euro zone citizens towards the European Central Bank. Between Christine Lagarde (President of the ECB) who didn’t see double-digit inflation coming in Europe and now an insane rise in key interest rates which are severely hampering borrowing capacity for households and businesses, there’s good reason to be wary.
Because the aspects of privacy and resistance to censorship are likely to be strong compromise with these digital currencies centralizedunder the full control of the central bankers.
« (…) As an ECB survey (from 2022) shows, users prefer cash payments for privacy reasons and card payments for the convenience they offer (speed and security). Convenience and privacy are therefore key to adoption. But the digital euro is likely to be perceived as insufficient in both these areas. (…) When it comes to protecting privacy from government and resisting censorship, many European citizens have only limited confidence in the ECB. »
Excerpt from the report
Despite the warnings of these economists, the ECB seems to be on course to building and issuing the digital euro in the next few years. As to whether it will be viable and find some adoption… That will very much depend on how successful Bitcoin and the crypto-assets are by then. The race to become the new form of currency begin.
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