More than 60 economists warned EU lawmakers that Europe could lose control of its money if the digital euro project fails, according to an open letter sent to Members of European Parliament before a scheduled hearing next week.
The letter was signed by economists from universities and policy institutions across Europe, including French academic Thomas Piketty, Dirk Bezemer (Professor of Economics of International Financial Development, University of Groningen), Peter Blom (Co-chair Sustainable Finance Lab, former CEO of Triodos Bank), Arnoud Boot (Professor of Corporate Finance and Financial Markets, University of Amsterdam), and Kristof Bosmans (Associate Professor, Department of Microeconomics and Public Economics, Maastricht University), among many others.
Economists outline risks from foreign payment dominance
The economists said Europe’s payment system is now controlled by a small group of non-European companies. In thirteen euro-area countries, everyday retail payments rely fully on international card networks.
The letter said recent developments have shown how fast payment access can become a geopolitical tool. Without a strong digital euro, the economists warned that dependence will deepen as US-backed private digital currencies grow across Europe.
The letter said Europe would lose control over the most basic part of its economy. That part is money itself. The economists said the only defense available is a robust public digital euro issued by the European Central Bank.
They said the system must create a direct link between citizens and the ECB. This would give people access to public money in digital form, alongside private bank money. The economists wrote that the system must work online and offline. It must protect privacy by design. It must also be available to all European residents, including people without commercial bank accounts.
The letter warned that if companies are allowed to refuse it, the project fails. If holding limits stay too low, citizens cannot use it as a serious store of value.
The economists urged the European Parliament, the European Commission, and the Council to act together and make the digital euro the backbone of a sovereign payment system built on European providers.
Banks lobby against project as limits and deposits raise concern
Europe’s banking industry has pushed back against the digital euro project. In November, fourteen large lenders warned lawmakers that the plan could damage private efforts to compete with US payment systems. The group included Deutsche Bank, BNP Paribas, and ING.
Germany’s Banking Industry Committee also criticized the project. The group said the ECB plan is too complex and too expensive. It said the system offers little clear benefit for consumers.
Hans Stegeman, chief economist at Triodos Bank, signed the open letter. After the first mention, Hans is referred to by his first name only. He said many banks are worried about losing retail deposits. Those deposits are cheap and stable funding for lenders.
Under current ECB plans, individuals would be allowed to hold up to €3,000 in a digital wallet. That money would sit outside the banking system. It would not be available to banks as deposits.
Hans said this change is what concerns lenders most. He said the issue goes beyond profits and balance sheets. “We want to have a financial system that serves society and not the other way around,” he said. He added that a public electronic payments system is a key part of that goal.
The economists warned lawmakers not to bend to financial lobbying. They said a weakened digital euro would turn the project into a symbolic compromise. The letter said Europe may not get another chance to fix the problem.
The signatories include Dirk Bezemer, Peter Blom, Arnoud Boot, Kristof Bosmans, Wouter Botzen, Rutger Claassen, Jézabel Couppey-Soubeyran, Bruno De Conti, Paul De Grauwe, Anne-Laure Delatte, Panicos Demetriades, and Sandrine Dixson-Declève, among others. The letter ends with a direct question for EU policymakers. Will Europeans control their money in the digital age, or will others control it for them?
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Source: https://www.cryptopolitan.com/68-economists-eu-digital-euro-us/
