Silke Mayr Tensions are rising between the European Central Bank (ECB) and several EU governments regarding the regulatory framework for the digital euro, a form of central bank digital currency that the ECB has been developing since 2021.
According to a report by Politico, sources indicate that countries such as France and Germany believe the ECB is exceeding its authority by determining limits on how much digital currency individuals can hold in ECB-backed wallets.
This technical disagreement has significant consequences. If the ECB sets a high limit, it could enable citizens to withdraw large amounts from traditional banks during economic crises, potentially destabilizing the financial system.
One diplomat expressed concerns to Politico that any restrictions on the digital euro might violate personal financial freedoms, raising alarms about excessive monetary control.
European States Challenge ECB’s Authority Over Digital Euro
The report highlights a fundamental question regarding the balance of power between the ECB and EU member states. As the ECB seeks to assert its monetary authority, member countries are advocating for greater involvement in shaping the digital euro’s regulatory framework.
Officials from nine nations, including Germany, France, and the Netherlands, argue that control over the digital euro should not be exclusively in the hands of the ECB, framing the issue as a broader financial concern with significant implications for everyday transactions across Europe.
In mid-September, data from the U.S.-based Atlantic Council think tank revealed that 134 countries worldwide are exploring central bank digital currencies, a significant increase from 35 in May 2020. The study shows that over 65 countries, including India, Australia, and Brazil, are in advanced stages of developing, piloting, or launching their CBDCs.
Every G20 nation is now investigating its own CBDC, with 19 countries in the advanced stages of exploration, according to the think tank.