EU Rules Out Replacement Of Cash With Digital Euro

(MENAFN- Kuwait News Agency (KUNA)) BRUSSELS, March 13 (KUNA) -- Finance ministers of the Eurogroup held a strategic discussion on digital euro and said they intend to present a legislative proposal in the second quarter of this year establishing the digital euro.
'Our proposal will address a number of key elements: legal tender status, financial stability, privacy, anti-money laundering requirements, international use and distribution of the digital euro,' EU Commissioner for Economy Paolo Gentiloni told a post-event press conference in Brussels on Monday evening.
He noted that in a rapidly digitalising environment, central bank money (currently only cash) is becoming less used for payments in a growing part of the economy.
'This risks diminishing the role of public money in payments and the economy at large, with possible consequences for the trust in the financial system,' he said.
All major economies and several private actors are considering issuing digital currencies. Those not denominated in euro may affect the role of the euro in the European retail payment markets and in international trade, he said.
'Let me also underline that it is clear that the digital euro should not replace cash and that this is not the Commission's intention,' he stressed.
On his part, President of the Eurogroup Paschal Donohoe told the joint press conference that they noted the reasons why the digital euro is a high priority for the EU's monetary union.
'These issues involve matters such as consumer preferences, providing a public good in the form of pan-European payment solutions and how we can preserve and deepen European monetary and economic autonomy,' he said.
Donohe said they will continue their work to provide a solid democratic and political basis for that project, and that the ministers touched upon some of the implications of granting legal tender status to the digital euro.
Pierre Gramegna, Managing Director of the European Stability Mechanism , told the joint press conference , that a digital euro is key if we want to increase the international role of the euro and make the euro competitive.
'The legal tender is key for the international attractiveness of the euro on the one hand and is important to gain the trust of the consumer of the people,' he added.
Further, the Eurogroup ministers discussed the collapse of the Silicon Valley Bank in the United States.
'The problems arise from the specific business model of the Silicon Valley Bank, and the picture here in Europe is very different,' said Donohoe.
'Our banks are overall in good shape. We have strengthened them enormously in recent years, and they are under the close supervision of national and European authorities,' he said.
'There is no direct exposure, therefore, to Silicon Valley Bank, but this is a reminder to us that shocks to the banking system can emerge at any time, how important it is to ensure the resilience of our banking system and how important, of course, it is to continue with our efforts to strengthen Banking Union,' added the head of the 20-member Eurogroup. (end) nk.gb

MENAFN13032023000071011013ID1105769199