A trade group representing the banking industry is urging European Union officials exploring the creation of a digital euro to proceed slowly and carefully.
The first question the group wants answered is whether a digital euro is even necessary.
The Institute of International Finance members want “a clear qualitative and quantitative impact assessment of the range of possible designs of a digital euro,” especially consideration of “various risks … to financial stability,” said Jessica Renier, managing director for digital finance for the IIF, according to Coindesk.
The IIF has 450 members, including major commercial and investment banks, payments networks, accountancy groups, crypto exchanges, and the International Monetary Fund.
Renier noted that a U.S. Federal Reserve white paper focused on “whether” a central bank digital currency (CBDC) is advisable, while the EU seems more concerned with “how” a CBDC would work.
As for the role of traditional banks in a world with digital central currencies, Renier said, according to Coindesk: “Doing away with the banks’ role would “would be extremely detrimental to financial stability and the economy, that is good for no one … you can’t exist without the banking system.”
“I would say a retail CBC certainly poses some potential challenges and risks. They’re not insurmountable challenges. But it’s important that we work through some of those challenges and risks ahead of time,” she said.
Leaders of the trade group have taken a stance in Europe that central bankers should examine the pros and cons of a CBDC rather than start from an assumption that one should be pursued.
On May 23, the group issued a statement related to consideration by the U.S. Federal Reserve Bank of a digital dollar. The statement reads, in part: “there would be many challenging trade-offs and design choices ahead.”
See also: ECB’s Panetta Urges Firms to Adopt EU Instant Payment Solutions
In related news, European Central Bank board member and high-profile digital euro proponent Fabio Panetta said during a speech Thursday that countries in the region should develop a pan-Europe payment system rather than depend heavily on U.S. credit card or technology companies, PYMNTS reported.
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