By Francesco Canepa and Jan in_struczzo
FRANKFURT/BRUSSELS (Reuters) -The European Central Bank’s plans to issue a digital euro face an uphill battle in the European Parliament as some lawmakers fear it will upend the banking sector, violate citizens’ privacy and stifle innovation.
The ECB renewed its pitch for a digital currency – essentially an online wallet guaranteed by the central bank – before lawmakers on Thursday.
The central bank’s board member Piero Cipollone presented it as a backup payment option if euro zone banks come under cyberattack or U.S. President Donald Trump‘s administration weaponises its country’s dominance in credit cards and stablecoins.
“The digital euro will ensure that all Europeans can pay at all times with a free, universally accepted digital means of payment, even in case of major disruptions,” Cipollone told a committee of the European Parliament.
But lawmakers gave the proposal, which has been stuck in Parliament for more than two years and much longer than the ECB had anticipated, a mixed reception.
Some fear a risk-free account would drain deposits from commercial banks and, even if the ECB set a cap on individual accounts, it could come under pressure to lift it in a crisis.
“Isn’t it a problem that we don’t really have control over the ceiling?,” asked Pierre Pimpie, a lawmaker for the right-wing Patriots for Europe Group.
Cipollone said the ECB would set that cap based on “rigorous analysis” and, in a crisis, financially savvy individuals would anyway be able to take their money out of the euro via U.S. stablecoins, which are crypto tokens pegged to an official currency.
Others raised concerns about the privacy of digital payments, the remuneration of companies that will be distributing the single currency and the risk of displacing private sector solutions.
Cipollone said physical cash won’t disappear and the digital euro’s open standards could be used by the private sector to roll out more sophisticated services. Issuing banks will anyway be compensated for their services, he added.
SLOW PROGRESS
Cipollone said he hoped to have the necessary legislation in place by June, pushing further back expectations that had originally been for this autumn.
But little has happened since the European Commission, one of the three institutions that have to give their go-ahead along with the European Parliament and the European Council of EU governments, formulated its initial proposal in 2023.
In a hopeful sign for the ECB, several lawmakers apologised to Cipollone for the delay.
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