European Commission announced a draft regulation to form the foundations for digital euro – a fresh form of money issued by European Central Bank (ECB). The thought presented as the next phase of the digital transformation of the financial system, however, sparks Growing controversy – both experts and citizens. There are voices in Poland informing against losing control of national money circulation and threats to citizens' privacy.
European Commission project: Digital euro as legal tender
In June, the European Commission presented Legislative proposalto enable the implementation of the digital euro at EU level. As expected, the digital currency would be full-fledged tender, equivalent to cash and accepted in all euro area countries. Importantly, the fresh rules may besides cover non-euro area countriesof which Polandthrough access to payment infrastructure and mobile applications.
New digital money to be available both online and offline, which means that transactions can be made even without net access. In practice, the digital euro would function like cash – but only in electronic form.
Digital euro mandatory for sellers and public institutions
As proposed by the Commission, all public institutions and retailers would be obliged to Accepting the digital euro as a legal means of payment. This would imply the request for adequate payment systems, as well as possible technological costs for the private sector.
Although the task officially assumes voluntary use from the digital euro by citizens, in practice, as any economists indicate, infrastructure and regulatory pressures can lead to gradual cash displacement from circulation.
Experts warn: hazard of centralisation and failure of privacy
One of the most frequently raised allegations against the digital euro is the anticipation of central monitoring of transactions by state or Union institutions. – It opens the door to full control of how and where we spend money – comments a typical of 1 of the foundations dealing with digital rights.
Anxiety besides raises possible the anticipation of limiting access to measures or blocking selected types of expenditure, especially in crisis situations. Although the Commission ensures that Offline transaction anonymity and plans to introduce legal safeguards, critics stay skeptical.
Digital euro in Poland: the back door for euroisation?
Although Poland has not adopted the euro as a national currency, the digital euro – as a currency available in applications and payment platforms – can besides gain popularity in our country. This can lead to real weakening of the gold positionand consequently, Limiting the impact of the National Bank of Poland on national monetary policy.
– It is simply a form of euro-denomination without formal accession to the euro area – warns 1 economist. – If Poles start utilizing the digital euro in bulk, then NBP may lose its ability to effectively regulate money supply and influence inflation – adds.
Benefits and risks: what will we gain and what can we lose?
Project supporters stress that the digital euro can bring many technological and safety benefits. Digital money would be guaranteed by the ECB, which means stableness and resilience to the bankruptcy of private payment entities. Possibility to make offline payments, the deficiency of a bank account and immediate settlement are only any of the advantages indicated by its designers.
On the another hand, skeptics pay attention to threat to individual freedom. “Digital money can be utilized as a political tool,” commented critics. In utmost scenarios “Money programming” is possible, i.e. limiting their usage for circumstantial purposes or places, which may violate fundamental civilian rights.
Will digital euro replace cash?
The European Commission ensures that The digital euro is to be a cash supplement onlyNot her replacement. However, any regulatory actions may in practice lead to a gradual withdrawal. Implementation of the work to accept the digital euro and the improvement of payment technologies may reduce the importance of cash in trade.
– It's not whether the cash will vanish tomorrow, but whether it will be utilized in 5 to 10 years at all – says the financial marketplace analyst. It besides points to social and technological trends, which advance fast, convenient and touch-free transactions – frequently at the expense of anonymity.
Conclusions: The financial revolution requires public debate
The introduction of the digital euro is the biggest change in the European payment strategy since the introduction of the single currency. While the very assumptions of digital transformation are consistent with the spirit of technological progress, the scale of possible consequences requires deep reflection and open debate.
Critics call for introduction of strong privacy mechanisms, clear limits of competence of central institutions and maintaining full availability of cash as an alternate to digital payments. Without specified safeguards, the task can Lose social trustand its implementation will affect growing civilian resistance.
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