European lawmakers are questioning the European Central Bank’s (ECB) credibility with the plan to create a digital euro. This comes after a problem with the ECB’s current payment system, which caused thousands of families and traders to be late with their payments.
When the Target 2 (T2) payment system broke down at the end of last month, banks could not settle deals with each other for almost a whole day. This was partly because central bank technicians initially got the problem wrong.
EU lawmakers voice doubts about digital euro after ECB outage
European lawmakers are voicing fresh doubt about the European Central Bank’s digital euro project after an outage in the ECB’s existing payment system caused delays for thousands of households and traders. pic.twitter.com/AebX1Fau4C
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Even though the failure wasn’t very bad, it did show the risks that come with putting all of the power in one place over a digital currency. Some people say that a single point of failure could cause problems for many people, which would defeat the whole point of a digital euro.
The ECB is not the only organization working on the digital euro project makes this worry even stronger. The European Parliament, the European Commission, and the European Council all need to vote and make a decision on the issue as well. This makes things more complicated and could cause a delay.
The lawmakers’ stance
Four of the eight groups that make up the European Parliament said that the event made them doubt the ECB’s ability to carry out its digital euro project. This is because the new payment system will be open to all the people living in the euro zone.
For instance, Markus Ferber of the European People’s Party, the largest group in the current parliament said, “This instance is a blow to the ECB’s credibility […] People will ask legitimate questions how the ECB will be able to run a digital euro when they cannot even keep their day-to-day operations running smoothly.”
Like Ferber, Rasmus Andresen is a Green politician who serves on the parliamentary committee that controls the ECB. He said that the central bank needed to win back people’s trust in the digital euro, or it could fail.
Johan Van Overtveldt is against the digital euro and says that the ECB should prove that it can maintain uninterrupted and secure financial infrastructure before proceeding with it.
On the other hand, Jussi Saramo still supports the launch of a digital euro. However, he said that the ECB needs to improve its own systems.
Will the ECB launch happen- The ECB explains themselves
A spokesman for the ECB made it clear that the bank hopes to finish getting ready for the digital euro by October, a deadline that now seems increasingly tenuous.
The digital euro was meant to be used alongside cash rather than instead of it. It was meant to meet the growing need for digital payment options while maintaining the security and trustworthiness of central bank money. However, the latest outage has shown that the ECB’s infrastructure is weak.
During this time, the ECB is supposed to test the digital euro, discuss it with different groups, and create rules for it.
After the new laws go into force, the EU’s Governing Council will likely decide if they want to make a digital euro or not. The Governing Council is made up of Lagarde, Panetta, and other ECB board members, as well as the heads of state central banks.
The ECB spokesperson said, “The recent outage doesn’t undermine the robustness of the digital euro infrastructure, which is being designed to guarantee that payments continue to function smoothly for users, even when technical issues arise.”
In addition, Christine Lagarde, the president of ECB explained that there is a change of leadership. She said:
“Fabio Panetta on the Board and then Piero Cipollone, who has replaced Fabio, have taken the lead together with a very good team, which is focused on accelerating the pace and hopefully campaigning enough with all the stakeholders – meaning the European Parliament, European Council, European Commission – so that we can eventually, not put to bed, but put to reality this digital euro.” Christine Lagarde
If the digital euro project is delayed or scrapped, it will have huge effects on the economy and finances. Europe might miss the chance to be at the forefront of the digital currency change, giving other countries or private sector projects the upper hand.
The ECB needs to move quickly to ease these worries. It is very important to be more open about what caused the loss and what is being done to prevent it from happening again. The ECB also needs to invest money in making its systems more secure.
One way to do this could be to form agreements with private technology companies. It is also important to work more closely with privacy experts, financial institutions, and other stakeholders to address their concerns and incorporate their input into the design of the digital euro.
Over the years, different people have had different thoughts about the digital euro. Should the EU decide to create a digital euro, it would be going against the U.S.’s decision not to do so and following the lead of countries like the Bahamas, Jamaica, and Nigeria that have already done so.
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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