While European Central Bank (ECB) is currently working on the Digital Euro project, some of the policy makers believe that it is possible to incorporate effective measures to prevent the CBDC from being used as an investment vehicle.
The digital Euro: Use as a means of payment?
The non-banking financial system, which was launched in 2016, is designed as a “disruptive” force that will undoubtedly revolutionize the financial services sector. According to Fabio Panetta, one of the members of the Executive Board of the ECB, it will be used exclusively as a means of payment.
“One of these instruments is the quantitative restriction of private assets”, according to the financial analyst, who was speaking before the Committee on Economic and Monetary Affairs of the European Parliament. Another, continues Panetta, “is to discourage its use as a form of investment by applying a dissuasive remuneration above a certain threshold, with larger holdings subject to less attractive rates”
The bank wants to use two types of solutions, including staggered pay and non-physical euro, to restrict employees. “At that time, we will choose how to combine them and calibrate them in such a way that maintain financial stability and our monetary policy posture and transmission. »
According to Panetta, early research from the ECB suggests that keeping total digital euro holdings between 1 trillion and 1.5 trillion dollars mitigate the negative effect on Europe’s financial system and monetary policy.
Read also ADA Pay (Cardano): more than 7 million businesses can accept ADA payments
These recent comments come to light as EU officials continue to work on the proposed law of the European Union in the world of crypto-currencies, namely the MiCA lawwhich will create a set of legal regulations for the crypto-asset markets in the 27 member countries of the European Union.