Cybersecurity, chaos of electronic payments. The possible adoption of the digital Euro and the risk for normal banks of having to survive the competition of central institutions. And then privacy, the freedom to use your money as you want. Is digital a risk or a convenience?
The day after. The day after the crash of the electronic payment system that we talked about in our article yesterday, the debate on which should be the best ways to follow for the future grows. Delegate (and risk situations like those of yesterday) completely to technology, or use hybrid forms that allow us to cope even with computer emergencies. The fact is that in this context, the words of what time ago by Christine Lagarde, president of the European Central Bank, which introduces the increasingly controversial topic ofEuro Digital.
“While technology is changing the way we pay, central banks have a duty to safeguard people’s trust.
Try asking those who found themselves in trouble yesterday if they feel confident or not, if they feel confident about referring to digitization as the only path in their financial lives.
THE DIGITAL EURO
Central Bank of Canada, England, Japan. The European Central Bank, the Federal Reserve, Sveriges Riksbank and the Swiss National Bank have signed a document that unites them on the path relating to digital currencies.
The digital euro can be “account-based” held with the ECB or it can be “token-based”, just like cryptocurrencies, bitcoin. Account holders receive a “token” that can be transferred from smartphone to smartphone via an app and can be stored in a safe deposit box or kept in a pocket.
But what are they the risks and advantages deriving from the adoption ofdigital euro?
Let’s start with the dangers: By offering a readily available and totally safe alternative to bank deposits, digital euros facilitate deposit runs In a crisis, depositors and other short-term investors leave banks unsafe to avoid losses. This risk is greater in the euro area due to the incompleteness of its banking union, the absence of common deposit insurance and the existence of bail-in provisions allowing for losses on uninsured deposits and other sources. of financing.
The Digital Euro would allow to a risk-free entity (the central bank)to compete with those risky (private banks) in the same market segment (means of payment). This is a design flaw to which the euro area is particularly vulnerable.
Secondly, a digital euro it would give an ever stronger power to Central Banks that could freely decide on interest rates and even affect purchasing decisions, preventing the use of currency against this or that product, this or that nation. Think about what would happen today with Russia …
And then there is the privacy, confidentialityon the use you make of your money. Other than banking secrecy. States, businesses and citizens would be under the total control of the Central Banks that issue the digital currency.
At the end of everything, or first of all, however, we find IT security. How guaranteed is it? How risky would it be to turn all our assets into a BIT that could vanish or be stolen with a cyber attack without us being able to do anything?
About and the advantages? Better ask the central bankers …