Brussels (Brussels Morning) – EU lawmakers delay digital euro legislation, sparking uncertainty for the €1.2bn project. Controversy and privacy concerns loom, stalling progress despite ECB investment.
Legislators in the European Parliament have delayed creating a legal framework for the digital euro, virtually shelving indefinitely the controversial project. The new European Parliament will determine after elections in June whether to begin work on the bill from scratch or make it a lower priority.
“One or several wallets, holding limits, transaction history — many questions are unsolved,” Stefan Berger, the German lawmaker leading negotiations on the digital euro, said. “It is unlikely that [the Economic and Monetary Affairs Committee] will come to strong compromises before the end of term,” he counted.
According to dlnews, the MEP was also responsible for shepherding discussion on the EU’s Markets in Crypto-Assets regulation. Members of the economic committee were predicted to vote on the legislative text early next week. Lawmakers were stuck and pushed little progress in negotiations with disputes on even the basics of potential uses.
Backlash and conspiracies
Obsessed with privacy and financial stability the digital euro has seen backlash from the public as well as officials. Top European Union officials have had to uphold the proposal from conspiracy theorists.
Privacy Concerns Arise
The CBDC project flashed concerns that the central bank will have extreme power to survey the population and access exposed data on individual spending habits. European officials have many times attempted to quell these concerns, saying that commercial banks hosting the digital euro wallet would be the arbitrators handling sensitive data.
Still, the usefulness of a retail CBDC for Europeans remains opaque. Some lawmakers suggested scrapping the digital euro legislation altogether in the last amendments to the bill. The European Central Bank is the machine behind the digital euro project, hoping to maintain financial autonomy by creating a home-grown payment method to rival American payment giants like Visa.
Implementation Challenges Persist
At the beginning of the year, the ECB carved out €1.2 billion worth of contracts for the private sector to construct the digital euro infrastructure. However, the ECB said that the scheme is on hold until European lawmakers have finalised the legislation.
Another point of argument for the digital euro is its thresholds. Individuals may not be permitted to hold more than €3,000 at a time, which analysts say will limit its use. Proponents say this feature is developed to protect financial stability by controlling bank runs. It also somewhat affects the function of cash, they argue.
Experts foresee the European elections starting June 6 to convince the parliament to the right, which is sensed as more friendly to the crypto industry. In Europe, left-wing lawmakers submitted to effectively ban Bitcoin — a proposition which never came through. Digital euro watchers expect that the likely more right-consolidated European Parliament post-elections will have a more comfortable time agreeing on legislation for the digital euro.
The postponement of digital euro legislation by EU lawmakers has cast uncertainty over the €1.2bn project. Privacy concerns and implementation challenges persist, stalling progress despite the European Central Bank’s investment. The project’s fate hinges on the outcome of the upcoming European Parliament elections in June.
