Fun

ECB Considers Capping Digital Euro in Circulation at 4,000 per Capita, Panetta Reveals

News Feed - 2022-06-18 03:06:10

ECB Considers Capping Digital Euro in Circulation at 4,000 per Capita, Panetta Reveals


With concerns about financial stability in mind, the European Central Bank (ECB) plans to limit digital euro holdings, according to Board Member Fabio Panetta. The plan is to have a maximum amount of digital cash in circulation similar to that of euro banknotes today, the official unveiled. Eurozone’s Central Bank to Keep Total Digital Euro Holdings Below 1.5 Trillion


A digital euro could potentially lead to the conversion of a large share of bank deposits in the euro area into digital cash, Member of ECB’s Executive Board Fabio Panetta warned in a statement at the European Parliament’s Committee on Economic and Monetary Affairs (ECON).


Deposits are the main source of funding for euro area banks, Panetta pointed out, emphasizing the authority is looking closely at the financial and monetary risks associated with the introduction of a central bank digital currency (CBDC). He explained: If not well designed, a digital euro could lead to the substitution of an excessive amount of these deposits. Banks can respond to these outflows, managing the trade-off between funding cost and liquidity risk.


Fabio Panetta believes it’s possible to prevent the use of the digital euro, which is still under development, as a form of investment rather than a means of payment. One of the tools the ECB intends to employ is imposing quantitative limits on individual holdings, he noted.


According to the regulator’s preliminary analyses, maintaining the total of digital euro holdings in the range of 1 to 1.5 trillion would help avoid potential negative effects for Europe’s financial system and monetary policy. The banker elaborated: This amount would be comparable with the current holdings of banknotes in circulation. As the population of the euro area is currently around 340 million, this would allow for holdings of around 3,000 to 4,000 digital euro per capita. ECB to Discourage Large Investments in Its Digital Currency


In parallel, the ECB may also take steps to discourage investments in digital cash by applying “disincentivising remuneration above a certain threshold, with larger holdings subject to less attractive rates,” Panetta added. The bank is yet to decide how to combine the two measures.


To achieve its objectives in that regard, the monetary authority will seek a gradual adoption of the CBDC, Panetta indicated, predicting it would likely take several years before a majority of Europeans hold the digital euro.


The official also remarked the ECB will aim for simplicity, in terms of technical implementation and user experience, when developing tools for the digital euro. “We want to provide people with a product that is easy to understand and easy to use,” the board member said. Ensuring privacy and contributing to financial inclusion are among the goals as well.


Fabio Panetta also insisted the European Central Bank needs to provide a digital currency of its own to “avoid confusion about what digital money is.” He reiterated previous criticism against cryptocurrencies which, in his view, cannot perform this function and called for closing any remaining regulatory gaps in the crypto ecosystem. Tags in this story Banknotes, board member, CBDC, Central Bank, Circulation, Crypto, Cryptocurrencies, Cryptocurrency, Digital Cash, Digital Currency, digital euro, ECB, Euro, Eurozone, Fabio Panetta, financial stability, holdings, Monetary Policy, Panetta


What do you think about the ECB’s intentions regarding the design of the digital euro? Let us know in the comments section below. Lubomir Tassev


Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration. Report: Bitmex, Deribit Liquidate 3AC"s Positions — Negativity Continues to Plague the Crypto Hedge Fund NEWS | 3 hours ago Report: Celsius Hires Citigroup to Help the Startup Find "Potential Financing" NEWS | 1 day ago


Image Credits: Shutterstock, Pixabay, Wiki Commons, Alexandros Michailidis Previous articleDecentWorld Launched The Long-Awaited Collections Next articleReport: Bitmex, Deribit Liquidate 3AC’s Positions — Negativity Continues to Plague the Crypto Hedge Fund Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItRipple CEO: SEC Lawsuit Over XRP "Has Gone Exceedingly Well"


The CEO of Ripple Labs says that the lawsuit brought by the U.S. Securities and Exchange Commission (SEC) against him and his company over XRP "has gone exceedingly well." He stressed: "This case is important, not just for Ripple, it’s ... read more.Central Bank of Brazil Confirms It Will Run a Pilot Test for Its CBDC This Year SEC Risks Violating Admin Procedure Act by Rejecting Spot Bitcoin ETFs, Says Grayscale FBI Issues Alert Concerning Malicious State-Sponsored North Korean Hackers Targeting Crypto Firms Ethereum Foundation"s Financial Report Discloses It Holds $1.6 Billion in Assets, 80.5% Held in Ether

News Feed

Vitalik Buterin moves $8M Ether to new wallet — Possible donation ahead?
Zoltan Vardai24 minutes agoVitalik Buterin moves $8M Ether to new wallet — Possible donation ahead?The Ethereum co-founder has a history of making multimillion-dollar cryptocurrency donations.217 Total viewsListen to a
McDonald’s metaverse in Singapore, South Korea classifies NFTs as virtual assets: Nifty Newsletter
Ezra Reguerra5 hours agoMcDonald’s metaverse in Singapore, South Korea classifies NFTs as virtual assets: Nifty NewsletterNFT sales surge volumes across various platforms and blockchains, with Bitcoin-based digital col
Bitcoin mining firm Bit Digital reports revenues up nearly 40%
Ezra Reguerra17 minutes agoBitcoin mining firm Bit Digital reports revenues up nearly 40%Bitcoin mining company Bit Digital said that its venture into artificial intelligence had already produced $4 million of revenue in
Bitcoin Meets Heartbreak In Drake’s Latest Track—Details
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Why Bitcoin Tumbled Below 8K
Bitcoin prices briefly slipped below $8,000 each on Thursday for the first time in three months, though the cryptocurrency is still more than double its level at the start of 2019. What do these bold – and volatile
Circle Chooses BNY Mellon to Custody USDC Reserves
Circle Chooses BNY Mellon to Custody USDC Reserves Boston-based Circle Internet Financial has announced the company has selected BNY Mellon to custody the firm’s usd coin (U
Fake ‘professors’ use phoney loans to trick victims in latest crypto scam
Brayden Lindrea7 hours agoFake ‘professors’ use phoney loans to trick victims in latest crypto scamThe scam often starts on a Facebook ad where those interested click the link and are met with a “Letter from the Pr
Bitcoin, Ethereum Technical Analysis: BTC Hits 2-Month High, Climbing Above $19,000
Bitcoin, Ethereum Technical Analysis: BTC Hits 2-Month High, Climbing Above $19,000 Bitcoin continued to trade higher on Jan. 13, with prices racing above the $19,000 level, hittin
Savannah Fortis10 hours agoSam Bankman-Fried FTX fraud trial continues: What to expect in the second weekIn the second week of his fraud trial, SBF will face testimonies against him from witnesses, including former partn
NFT Marketplace Blur Launches Native Token, BLUR Price Drops 85% in a Matter of Hours
NFT Marketplace Blur Launches Native Token, BLUR Price Drops 85% in a Matter of Hours The Blur non-fungible token (NFT) marketplace launched its native token this week, and users w
Savannah Fortis11 hours agoUniversal Music and Google in talks over deal to combat AI deep fakes: ReportUniversal Music and Google are reportedly in negotiations over a tool that would allow for the creation of AI tracks
Undeterred by Fears of a Banking Crisis, ECB Raises Interest Rates by 50bps
Undeterred by Fears of a Banking Crisis, ECB Raises Interest Rates by 50bps The European Central Bank (ECB) has convened to raise three of its key interest rates by 50bps (0.5%), f