2024-02-23 06:36:32
Recently, the European Central Bank (ECB) published a post and a video about the digital euro, with the aim of emphasizing that such a central bank digital currency (CBDC) will not be created for investment purposes. As described in the post written by the three ECB leaders, the digital euro “will be for payments, not for investment purposes”. They also tried to appease the banks now. With the emergence of such a CBDC, they do not have to worry about customers withdrawing their deposits and preferring to keep them in digital euros.
There is no need to be afraid of the digital euro, says the ECB
Because ordinary people have concerns and fears about CBDC, but banks are also afraid. They fear that customer money will flow from the big commercial banks to the ECB, which controls the CBDC. The central bank tries to prevent this with several means, in addition to distributing educational materials similar to the current one. On the one hand, no interest is paid on the digital euro, and on the other hand, company assets could not be kept in it. The document highlighted that a mechanism operating on the “reverse waterfall” principle would connect digital euro accounts with bank accounts and cover the latter’s possible lack of coverage.. This reduces the incentive to hold large digital euro balances.
The combination of restrictions, interest-free and “reverse waterfall” would discourage people from using it for investment purposes. According to the document, the ECB is aware that the appearance of a digital euro and its control by banks would significantly increase the role of the stablecoins of various large companies. Bitcoin’s too, no wonder the ECB doesn’t take kindly to the rise of the biggest cryptocurrency. However, the bottom line was that, according to the ECB, the digital euro is not a value-preserving or value-storing device in any form, it would only serve circulation purposes. Alongside the documentation, the bank also published a video, which also describes the advantages of the digital euro.
In the video, of course, they happily emphasize that the transactions will not be observed, monitored, tracked and so on. And so they pour money into the digital euro project. Of course, we manage this in place, because the ECB can regulate spending, control the use of the digital euro and so on based on any scenario. The CBDC would give governments and banks total control over what and how citizens can spend.
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