European Economist: Digital Euro Project May Be Doomed

Odaily Planet Daily News European economists said that the digital euro project may fail because it aims to protect the middle bank. A report jointly released by economists Cyril Monnet and Dirk Niepelt criticized one of the main goals of the ECB’s CBDC design, saying it poses a risk to the entire project. “The project’s design choices raise questions about the ECB’s objectives and strategy, and therefore the digital euro is likely to die as soon as it is launched,” the duo wrote. The report added that “key design proposals favored by the Governing Council undercut rather than increase the appeal of the digital euro. These include holding limits for consumers (a few thousand euros), holding limits for merchants or even lower (zero)." The pair questioned the ECB's aim of "doing no harm to banks and protecting their business models". According to the report, “a significant portion of banks’ profits come from providing payment services. Therefore, unless digital euro-related banking services, such as onboarding or wallet management, become more profitable, banks have no interest in seeing a digital euro flourish. ” (The Block)