Spanish Economist Proposes Balanced Approach to ECB's Digital Euro

Spanish Economist Proposes Balanced Approach to ECB's Digital Euro

Spanish economist and politician Fernando Navarrete has presented a balanced approach to the European Central Bank's (ECB) digital euro initiative. Navarrete, who oversees the legal framework for the digital euro at the European Parliament, advises treating the current retail digital euro proposal as a 'Plan B'.

Navarrete believes the EC should facilitate convergence, fostering private-sector innovation through interoperability and consistent regulation. He criticizes the current proposal for ignoring private-sector progress and introducing privacy and financial stability issues. Instead, he proposes a wholesale Central Bank Digital Currency (CBDC) to enhance settlement efficiency, market integration, and strategic autonomy.

Navarrete's strategy comprises three pillars: fostering a competitive private-sector payment infrastructure, offering a targeted offline digital euro, and establishing a wholesale CBDC. The offline digital euro would complement cash, offering targeted public value with limited risks.

Navarrete argues that the current digital euro proposal introduces more risks than benefits and should only be considered as a last resort. He advises the ECB to act as a neutral enabler, supporting technical standards and interoperability among payment systems. The EU should prioritize a more balanced approach that emphasizes public-private collaboration and resilience.

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