The digital euro passed a key hurdle on February 15, with a European Parliament committee approving a draft opinion backing the European Central Bank’s proposed digital currency.
The Committee on Civil Liberties, Justice and Home Affairs (LIBE) voted by 48 votes to six, to agree with the ECB that creating a Central Bank Digital Currency (CBDC) is needed to keep the euro competitive in an increasingly digital world.
Like cryptocurrencies such as Bitcoin and Ethereum, users would keep digital euros in electronic “wallets”, allowing them to “place funds, withdraw cash and execute and receive payment transactions to and from third parties.”
For the European Parliament panel, introducing a digital currency was important for financial inclusion .
“In a context where cash alone cannot answer the needs of a digitalised economy, it is essential to support financial inclusion by ensuring universal, affordable and easy access to the Digital Euro to individuals in the euro area, as well as its wide acceptance in payments,” the committee’s opinion reads.
The digital currency is not without its critics.
Some libertarians argue the centralised currency could be used for social control. It is theoretically possible, they say, that digitised euro tokens could be programmed only to be spendable in certain locations and on certain goods.
The draft opinion clearly acknowledges some of these criticisms.
The digital euro should not constitute “programmable money”, says the committee.
Tokens should not be able to have “intrinsically defined spending conditions [that] can only be used for buying specific types of goods or services, or [that] are subject to time limits after which they are no longer usable”, it argues.
The proposal to establish the digital currency now heads to the European Council and Commission.
Those two bodies will examine the European Parliament’s changes to the document before the legislation moves forward again.
The digital Euro is a "very bad idea" and is "all about power," Dutch Euro MP @MPHoogeveen tells our Head of News @JustinStares.
Watch the full interview at https://t.co/BndNVI5f6q pic.twitter.com/MJQx3XIEvN
— Brussels Signal (@brusselssignal) February 6, 2024
Even though the European Parliament has included a clause banning programmable currency, some MEPs remain concerned a CBDC could still eventually be used to unfairly coerce Europeans.
“[W]ith CBDCs, governments would be able to exercise near total control on the flow of money,” LIBE member Tom Vandendriessche, one of the MEPs to vote against the draft, told Brussels Signal.
The senior Vlaams Belang (Flemish Interest) party politician went on to allege that the establishment of a Digital Euro was ultimately “all about control”, and that it may be weaponised by governments to shut down political dissent.
“We are already seeing a rising trend where bank accounts of political activists are being shut down,” he said.
“A local chapter of my party was recently barred from using Payqonic – a mobile payment platform – because of political reasons, a decision which was shorty after reversed because of public pressure.”
“This goes to show that cash money should be a civil right, including access to it.”
Other politicians have questioned the purpose of establishing a digital euro, with Dutch politician Michiel Hoogeveen describing it as a “solution looking for a problem”.
“Why do we need a Digital Euro?” Hoogeveen asked during an interview with Justin Stares, head of news at Brussels Signal.
He accused the ECB of having a “Kodak moment” with the proposal, trying to hold onto an outdated form of fiscal control when much of the private sector is leaving those controls behind.
“It’s all about power,” he said.
The digital euro’s launch looks likely to be pushed back substantially from its 2027 goal as the European Central Bank attempts to overcome tepid support from commercial banks and citizens.@mmMatejMesko | @MillicentLabs | @DigiEurohttps://t.co/ByDAS7VUK7
— Brussels Signal (@brusselssignal) February 7, 2024
