Thursday, January 27

European Central Bank announces market advisory group for digital euro

The European Central Bank (ECB) has announced the formation of a market advisory group for the purpose of exploring the infrastructural and circulation potential of the digital euro from the perspective of industry leaders.

According to reports, the group will also aim to uncover the digital euros optimal function within the pan-European currency’s vast payments ecosystem.

The press release stated, “The European Central Bank (ECB) has today announced the members of the Market Advisory Group for the digital euro project. The Eurosystem’s High-Level Task Force on Central Bank Digital Currency called for expressions of interest on 14 July, following the Governing Council’s approval of the digital euro project investigation phase. After assessing applications, the selection committee appointed 30 senior business professionals with proven experience and a broad understanding of the euro area retail payments market.”

What you should know

In July 2021, the Governing Council of the ECB disclosed plans to commence a two-year preliminary research initiative into the feasibility of the digital euro project, assessing parameters, such as infrastructure creation, distribution and design, with an assured intention to “complement cash, not replace it.”

Over the past year, the ECB has made progressive steps in pursuit of a digital euro, an initiative that implies its desire to foster growth within the digital asset space. However, the institution has also expressed, seemingly paradoxically, concerns around the rapid advancement of the space, with its vice president claiming that crypto has “very weak fundamentals” in a May 2021 interview.

The group consists of 30 high-ranking financial professionals. It includes a number of well-established experts from the banking and financial sector, including Aleksander Kurtevski, managing director of Bankart; Antonio Macías Vecino, head of payments discipline at BBVA; and Axel Schaefer, payment regulation and innovation specialist at Ingka Group (Ikea), among others.

It is expected that initial consultation meetings will commence in November 2021 and will operate on a monthly basis. The 30 members will work in advisory roles and report their findings for consideration in retail payments discussions within the Euro Retail Payments Board. It stated, “Meetings are to be held at least quarterly, starting in November 2021, and written consultations will be organised between meetings. The issues identified will also be considered in the Eurosystem’s established forum for institutional dialogue on retail payments, the Euro Retail Payments Board (ERPB).”

What they are saying

ECB board member Fabio Panetta expressed his high expectations for the project’s success. He stated, “I am pleased that many high-quality experts from the private sector are willing to contribute to the digital euro project. Their expertise will facilitate the integration of prospective users’ and distributors’ views on a digital euro during the investigation phase.”

In an interview with the World Economic Forum in early September, Christine Lagarde, President of the ECB, scrutinized the vague categorization of dollar-pegged digital assets within the crypto sphere, concluding that stablecoins are “pretending to be a coin” but, in truth, are “completely associated with an actual currency.”

Coupling this assessment, she advised that assets of this nature should be “checked, supervised, regulated” to ensure transparency, liquidity and operation that best support the safety of the consumer.