Digital euro, Visco: “Benefits for financial stability”

The governor of the Bank of Italy: "The currency issued by the central bank would help to preserve the confidence of citizens in the monetary system and in the forms of private money. Guarantee security, privacy and ease of use "

26 Nov 2021

F. Me.

The digital euro would guarantee greater financial stability in a context of unstoppable growth in digital payments. According to the governor of the Bank of Italy, Ignazio Visco, "the digital euro would ensure that the public continues to enjoy the benefits of using the only risk-free currency, the one issued by the central bank, and would help to preserve trust. of citizens in the monetary system and in the forms of private money. Monetary policy and financial stability could also benefit from this ”.

"A digital currency issued by the Eurosystem would act as a complement, rather than a substitute, with respect to cash and other electronic means of payment that exist or that may be developed in the future", he pointed out speaking at the conference "The European financial system in the post-perspective -Covid ”, organized by the European Association for Banking and Financial Law (Aedbf).

Its characteristics, Visco continued, "must be such as to meet user expectations, guaranteeing privacy, security and ease of use, and foster innovation and digital transformation of the economy". And to "avoid undesirable effects on the maintenance of monetary and financial stability, quantitative analysis will be necessary to evaluate the appropriateness of introducing restrictions on the use of digital currency (for example, limits on the amounts that can be held or transferred by users)".

According to the governor, "the decision on the possible issue of a digital euro will be taken in the next few years in the light of the results of the activities we have launched".

The risks of crypto-assets

"The uncontrolled diffusion of crypto-assets presents strong risks to the public and our commitment to contain them is constant, informing savers of the dangers associated with investments in those digital assets which, by their nature, have an unstable value and are highly exposed to speculative bubbles - Visco then clarified - For the so-called stablecoins, which aim to maintain a stable value over time and which could be used for payments, we collaborated in the drafting of the ten recommendations adopted by the Financial Stability Board and recognized by the Group of Seven (G7) concerning the regulatory and supervisory implications ".

"We also actively participated in the negotiations for the definition of a European regulatory framework aimed, among other things, at ensuring the redemption of these activities. We operate in the headquarters of international cooperation to ensure that innovations in private digital payments are secure; as reiterated within the G7, no stablecoin project can be launched until the necessary legal, regulatory and supervisory requirements are adequately met ".

According to the global governor, “the risks to financial stability deriving from the development of the crypto-asset market are increasing. Although the latter represent a small share of the total value of financial assets, their capitalization increased 3.5 times in 2021, reaching 2,800 billion dollars ”.

"The use of digital technologies in the offer of financial products and services must take place in conditions of safety for investors, issuers and the economy in general - he warned - The characteristics of some types of crypto-assets, such as anonymity or the emission and circulation on completely decentralized infrastructures - concluded the governor - also give rise to particular concerns linked to excessive energy consumption, money laundering and the financing of terrorism ”.

Leave a Reply

Your email address will not be published. Required fields are marked *