European Central Bank exec says CBDCs may negatively impact weak currencies

The executive border of members at the European Central Bank said that CBDCs have advantages but it may negatively impact those currencies, which are weak. 

In the present time more than 100 countries’ Central banks are doing their development and research work in the Central Bank Digital Currency (CBDCs) and most of them tested their developed CBDCs on multiple channels. But only a few of them are eager to be introduced to the real-life economy to use. 

On 10 December, an Executive Board of the member at the European Central Bank (ECB), Fabio Panetta, shared his point of view on the Digital Euro ( CBDcs) adoption and noted that there are a few negative points with the advantage that may end up into a threat for those countries and currencies which are weak. 

In The very start of the speech, Fabio pointed out the main advantages that can be grabbed with the help of the CBDCs adoption. And after that Exec said that it can end up with instability in the economy. 

“leading to a digital “Eurovision”, which could hamper the transmission of monetary policy and lead to financial instability…The risks would be greater for emerging economies that have weak currencies and economic fundamentals, and close trade and financial ties(53) with the Single Market and which are integrated into global value chains”

However, Fabio asserted that Digit Euro should be made like every person ( insiders and outsiders of the country) can use. But also noted that it can end up losing autonomy by Central banks. 

The Executive also shared his unhappiness because of the US leading companies dominant in the EU in online payments. He added:

“Two U.S. intermediaries handle two-thirds of card payments, while another U.S. operator dominates online payments. Digital payments seem to be expensive for many users and are mainly used by people with medium to high incomes.”

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