The EU’s CBDC plans face skepticism in the European Parliament

The European Union’s elected lawmakers appear skeptical of the point of issuing a digital central bank currency (CBDC) as the bloc prepares to make key decisions on a digital euro in the coming months.

During a Wednesday debate, members of the European Parliament raised concerns about privacy, government control and the role of banks, and some are beginning to wonder whether the project is even worth pursuing.

“There is one key question that has not yet been credibly answered, which is what is the added value…. What can I do with a digital euro that I cannot do with current payment options?” asked Markus Ferber, economic spokesman for the center-right European People’s Party.”As long as there is no answer to this question, there is going to be a lot of skepticism.”

That view appears to be shared by some in the centre-left Socialists and Democrats group, the second largest in the chamber.

“The question we have to ask is why we do it and with what goal,” said French lawmaker Aurore Lalucq. “We’re jumping on the digital bandwagon because it’s fashionable, and trying to deliver it with forceps … I think you have to be extremely careful.”

The European Central Bank (ECB) will make a formal decision on whether to issue the digital euro later this year. But officials are keen to get lawmakers’ assent to any legislation that would be needed to comply with the CBDC.

“If we don’t offer our own solution, we risk private stablecoins or foreign central bank digital currencies filling the gap,” EU Commission’s Mairead McGuinness told lawmakers, adding that “a digital euro could support more innovation and payments such as payment from machine to machine.”

McGuinness, the commissioner responsible for fiscal policy, is due to publish a bill next month which she said would cover the euro’s legal tender status, the compensation private operators will receive for distributing the currency and privacy – an issue which topped an ECB inquiry in 2021 by public concern about the plans.

“This is not a ‘Big Brother’ project,” McGuinness said. “We should not address this issue to the citizens of this chamber as some sense of a control project … it is an election project.”

Some lawmakers, concerned that private-sector projects like the now-abandoned Facebook Libra stablecoin could usurp the central bank’s role, may be swayed by these arguments. Others worry about the authoritarian implications of greater government control.

“I was told we need this so we can compete with China,” said Michiel Hoogeveen, a Dutch lawmaker from the right-wing European Conservatives and Reformists Group. “Today we would counter Communist China with policies of rollback or containment, not by copying it.”

Others said they were concerned that the ECB is under the thumb of bank lobbyists and that planned restrictions such as caps on holdings could unnecessarily clip CBDCs’ wings.

“Some of the existing interests that fear the disruptive effect of the digital euro are trying to inhibit the design,” said Ernest Urtasun of the parliament’s Green Group. “The decisive thing is the development of this project. We cannot leave it in the hands of the ECB and the technical advice they have, which comes from the private banking sector.”