ECB Prioritizes P2P And E-commerce In CBDC Development
The European Central Bank (ECB) has offered more information concerning its upcoming digital Euro in a statement on February 22nd. The ECB announced that in the development of its CBDC, its digital Euro would prioritize person-to-person and e-commerce payments.
ECB Building A Digital Euro With Multiple Uses
However, other use cases will follow in the second phase of development. According to the report, the subsequent developmental stages will focus on other areas, such as government and physical store payments.
Meanwhile, the ECB’s CBDC project team argued that the digital Euro must have multiple use cases. They said all Euro Area (EA) nations have different payment preferences and challenges.
Therefore, a digital Euro should have several use cases that will help cater to end-users’ diverse needs and fill the market gaps. Furthermore, the team mentioned using a phased implementation approach.
They believe such an approach has multiple benefits, such as a smoother payment experience for end-users as they gradually become familiar with various technologies and their use cases. Additionally, this approach would reduce implementation difficulties with regard to a pan-EA level rollout.
In September 2022, Christine Lagarde, the President of the ECB, talked about the ECB’s CBDC proposal. In addition, Lagarde highlighted the properties of the upcoming digital Euro.
According to her, the CBDC should be borderless, fast, and easy to use. The president, however, said there is a need for adequate supervision and regulation.
Panetta Likens Crypto Investment To Gambling
Last July, the ECB cautioned Euro nations about the perils of regulators being too hasty in their actions regarding the Markets in Crypto-Assets (MiCA) law. Some regulators argued that the MiCA law was taking too long. As a result, these regulators created laws to guide and regulate crypto firms.
However, the EU and ECB plan to ensure all EU nations adopt one crypto law. Moreover, the MiCA law has undergone several modifications since its introduction.
However, the law would only become functional in 2024. Last month, Fabio Panetta, an ECB executive board member, called for the regulation of crypto investments.
Panetta argued that cryptocurrencies are ” speculative ” and lack any “economically or socially useful function.” He likened investing in crypto to gambling.
Meanwhile, the ECB supervisors have recently recommended that banks operating in the European Union (EU) consider imposing limits on their Bitcoin holdings. The supervisors advised them to do this prior to when the Basel Committee on Banking Supervision (BCBS) global regulatory framework becomes legal.
In addition, the supervisors cited concerns about potential risks posed by crypto assets spilling into the banking sector.
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