Bank Of Spain’s Deputy Governor Says ECB Should Access Impact Of Digital Euro

The deputy governor of the Bank of Spain, Margarita Delgado, has made remarks about what the European Central Bank needs to do to assess the impact of the digital euro. Delgado believes it necessary to determine the digital euro’s effects on the banking industry before making a final decision about the possible launch.

ECB to assess the impact of a digital euro on banks

Delgado published her speech on the Bank of Spain’s website, saying that the digital euro could resolve two significant developments in the market. The CBDC will solve the issue of increased digital payments, demonstrating a need to ensure citizens still use central bank-issued money within a digital-savvy setting.

The other crucial development was the rise in the number of digital assets in the industry. A digital euro will offer a unique payment solution supported by European infrastructure while being endorsed across the Euro region.

While a digital euro will play a critical role in addressing the issues in the sector, Delgado said that the central bank digital currency (CBDC) will not affect the stability of the financial industry. She also noted that the digital euro would not ignore the features that might affect the banking industry’s competitive nature and profitability.

She also said a need to ensure financial stability was not affected by launching a digital euro. She further noted that the bank was committed to identifying the right balance between protecting the financial industry and ensuring the digital euro will adequately meet users’ needs.

Digital euro to co-exist with existing payment solutions

The ECB will determine whether its digital Euro plans will go as planned in October. According to Delgado, there was room for a digital euro to co-exist alongside a private payment solution.

The European Commission had earlier tabled a legislative proposal addressing a digital euro’s benefits. The proposal noted that a digital euro could be used the same as cash, not as a replacement. With the two assets co-existing, it is possible that more financial benefits will be on the way.

Delgado also opined that the objective of the Bank of Spain was to create a basic payment method. Intermediaries could later improve this method by using value-added services to meet their evolving needs.

Delgado also believes that a digital euro should go beyond being a digital alternative to cash and benefit the digital financial sector. The CBDC is set to offer significant benefits across Europe while streamlining payment systems.

“In fact, our expectation is that the digital euro enables the development of new pan-European payment and financial services by the private sector, making it easier to compete with non-European solutions. Ultimately, a digital euro should stimulate innovation, foster competition, and enhance resilience in the European payments market,” Delgado said.