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Ep 18: Why Do We Need a Digital Euro?
182 Plays1 year ago
Anne-Sophie Gógl (Digital Euro Association) and Peter Kerstens (European Commission) shed light on the digital euro's potential form and the crucial role of various stakeholders in making it a reality. We discuss the European Commission’s proposal and the ECB’s upcoming decision to potentially move from investigation to realization of this ambitious project. Amidst debates over privacy, security, and the impact on cash, we delve into the EU’s vision of a digital currency embodying its core values.
Find out more in our explainers at owlexplains.com
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Transcript
Introduction and Overview
00:00:06
Speaker
Hello and welcome to this Owl Explains Hootenanny, our podcast series where you can wise up on blockchain and web3 as we talk to the people seeking to build a better internet.
Sponsors and Speaker Introduction
00:00:17
Speaker
Owl Explains is powered by Avalabs, a blockchain software company and participant in the avalanche ecosystem. My name is Silvia Sanchez, project manager of Owl Explains and with that I'll hand it over to today's amazing speakers.
Focus on Digital Euro
00:00:33
Speaker
Hello and welcome to this new episode of the I Will Explains podcast. My name is David Apateri and today I'll be hosting this chat on the digital euro. As you know, the European Union is working on plans for a potential European central bank digital currency, or CBDC. Back in June, the European Commission launched a proposal for a legislative design for a retail digital euro.
00:00:55
Speaker
and the potential and feasibility of the project is now being assessed by the European Central Bank, which should come to a decision next month in October.
Guest Introductions and Roles
00:01:04
Speaker
I have two esteemed guests joining me today to talk about this, Anne-Sophie Gogel, Executive Board Member of the Digital Euro Association, and Peter Kirstens, Senior Advisor and Co-Head of the FinTech Task Force at the European Commission's Director General for Financial Stability, Financial Services, and Capital Markets Union.
00:01:24
Speaker
I would like to start by asking our speakers to introduce themselves. And Sophie, can you start by telling us a bit more about yourself, your work, and when you start being interested in the digital Europe?
00:01:35
Speaker
Yeah, thank you, David. Thank you for the invitation. I'm very happy to be here today on your podcast and to talk about a very interesting topic, the digital euro. I have been focusing on CBDC and related topics such as blockchain and crypto assets for three and a half years now. I became aware of the topic at the Booneströckerei, the German national printer, where I worked for almost 10 years now.
00:02:05
Speaker
They print banknotes and of course also looked into the future of money.
00:02:10
Speaker
I started then to be active in the Digital Euro Association in 2021, first as a fellow, then as an expert. And since May, 2023, so of this year, I'm on the board of the Digital Euro Association. The DIA is an independent association with many experts from all disciplines, so legal, technical, and so on, that looks at all possible forms of regulated digital euro.
00:02:40
Speaker
I am significantly responsible for policy communication or political communication there. And I was also chair of the DA's position papers on the public digital euro and especially also on the for the commentary on the proposal for the digital euro. Thanks very much on Sophie. Peter, over to you. Yes. So I'm Peter Kirsens. I am advisor for technological innovation and cybersecurity.
00:03:08
Speaker
at the European Commission's financial services department. I have led our work on digitalization in finance since 2015. I'm a career civil servant, so I've been at the European Commission for much longer. But since 2015, I've been focusing on digital finance issues, ranging from cloud computing into security, authentication, blockchains, artificial intelligence.
00:03:38
Speaker
work on and are taking interest in digitalization of finance than the digitalization of money and ultimately a digital central bank.
00:03:49
Speaker
digital currency isn't too far off. So this automatically ends up in the area in which I'm active. So that has been my involvement. And I'm very, very happy to be here and to discuss with you the video and also within Sophie the EU's intentions or plans or aspirations for a digital euro.
Why a Digital Euro?
00:04:14
Speaker
Thanks, Peter. And I would actually like to start off with the question that gives the title to this episode. Why do we need a digital euro? And I would like to start with Anne-Sophie. Thank you. Very important question. Digitalization has changed many things. As Peter already said, there are more and more applications and possibilities in the digital world. And so the payment behavior of citizen has also changed.
00:04:40
Speaker
While there used to be only bank notes and coins for payment, we the citizens now have the option of paying with
00:04:48
Speaker
various possibilities like with cards, with Paypal or Apple Pay just to name a few, also in the digital world. And unlike cash, these digital payment options are offered by private companies, which base their business model or their revenue on various business models, like also collecting data and we don't know exactly what they use them for, but of course they collect our data.
00:05:18
Speaker
The ECB has noticed the trend and now in line with their mandate, wants to issue a regulated and independent digital currency alongside cash. And several factors play a role here.
00:05:34
Speaker
financial independence from private payment solutions, financial and digital inclusion, access to money in times of crisis, like natural disasters, for example, but also financial stability, just to name a few. Yeah. Thanks. Thanks for the overview. Peter, I would like to ask you the same question. In your view, why do we need a digital euro?
00:06:01
Speaker
Well, and Sophia has already given the main reasons, but I would like to highlight two or three. First, as our societies become ever more digital, we also need to be able to pay in this. And it is currently not possible to use a public means of payment, official currency, paper form in a digital environment. You can only use
00:06:29
Speaker
commercial bank money-based payment instruments or privately issued stablecoins or payment instruments to make payments in a digital economy. And so there's just no public option. That's one reason. But also in the, what I say, in the offline world, cards, any type of cards, any type of mobile phone-based payments, all currently run on commercial bank
00:06:58
Speaker
of privately issued money. And so a big reason is that there is no public option in this and it is considered important to offer this public option. Second reason is that while cash remains very important and is the means of payment of preference for many, many people,
00:07:24
Speaker
for a number of reasons, including some that do not have the inclusion to use cards or that do not have the skills or the access to use electronic means of payments. So cash remains important. We do see that cash is going down across the Eurozone and therefore it is important that a public option to pay also is available to compensate for the reduction in the use of cash. And then finally,
00:07:54
Speaker
But I would say a group of reasons is that a digital euro can contribute to financial inclusion.
Benefits and Challenges of a Digital Euro
00:08:01
Speaker
It can contribute to cheaper and faster payments. Public money presents a number of advantages for conducting monetary policy for the ECB.
00:08:16
Speaker
Finally, and that we shouldn't forget is that central banks are very trusted entities and people need to have trust in the money and the payment instruments that they use and who can give more trust than the central bank can.
00:08:34
Speaker
So these are reasons in favor of a digital euro but that does not mean that we have decided that there will be a digital euro or that we need a digital euro. That discussion is still ongoing but we are just looking at making the digital euro a possibility and then we will decide on and the ECB in particular will decide as to whether or not it is necessary.
00:09:00
Speaker
Thanks. We mentioned the proposal on the digital euro by the European Commission, but the EU is not the only jurisdiction that's thinking about the design of a CBDC. Our latest, I will explain, podcast episode delved into plans for a digital pound being assessed by the Bank of England. And we know that also outside of Europe, other countries have already implemented central bank digital money with different results.
00:09:27
Speaker
So I would like to ask you, Peter, what makes, in your view, the design of the digital euro different from other CBDCs?
00:09:35
Speaker
Well, the actual design hasn't been set yet, so it's in a way too early to say whether the design will be different or the same, but we can look at trajectories, especially if we also look at other CBDC initiatives that are being taken in other jurisdictions, some that are further ahead and that have been implemented already.
00:09:59
Speaker
And there we can sort of compare and contrast a little bit. So I think it's fair to say that the interest in central bank digital currency predates the emergence of private stablecoins. So central banks, a number of central banks were already looking for all kinds of reasons at a central bank digital currency before people ever heard about stablecoins, which was around the time that
00:10:27
Speaker
Libra was announced and there was this, but that announcement and then the emergence of very large stablecoins really gave a lot of momentum to the CBDC debate across the world. And because it's the emergence of private stablecoins that gave really a momentum to the development, a lot of jurisdictions are considering using the same technology stack for their CBDC. So they say, well,
00:10:53
Speaker
What we are going to do, or we're considering a central bank digital currency as a public alternative to these private stablecoins and therefore they use the same technology.
00:11:05
Speaker
But in the EU, a DLT-based or a blockchain-based digital euro for retail use is not really the main option. And preference goes, for the time being at least, for more tested and more familiar technologies. So what we're really looking at and what our colleagues at the ECB and the euro system are really looking at is more a retail payment system
00:11:35
Speaker
based on public money, based on a digital euro, rather than a retail payment system based on commercial bank money or private stablecoins.
Technology Choices for the Digital Euro
00:11:44
Speaker
So that doesn't mean that it will not be based on distributed ledger technology or that distributed ledger technology will not end up playing a role
00:11:56
Speaker
in this, and we'll also need to see what the European legislature will say on this, the Council of Ministers, the European Parliament, because they may want to weigh in on design features of the euro, or it should be this technology, that technology. So I would say that for those that are interested in central bank digital currency, and those people who count on the digital euro
00:12:24
Speaker
being a crypto or a blockchain Euro issued by the ECB and the Euro system, these people may end up being disappointed or maybe relieved depending on their perspective on blockchains and distributed ledger technology. Or, and we'll need to see how that goes, they may end up being positively surprised if by the time
00:12:50
Speaker
we move towards the actual implementation, distributed ledger technology plays a smaller or bigger role in the final digital euro design. Great, thank you. Sophie, I'm turning to you now. What do you think will be the main competitive advantage of the digital euro?
00:13:11
Speaker
Well, as it was already said before, there are no final decisions on the digital euro yet, so it is difficult to know the competitive advantage yet. But of course, it looks like there will be a digital euro, and in the last two years, the ECB investigation phase took place, and the results offer a little insight into the possible design of a digital euro.
00:13:34
Speaker
However, it is not clear how it will be shaped in the end. For this reason, I would formulate wishes that I believe would add value to the digital euro over the digital payment options, the private digital payment options. So I think a high level of privacy should be put in place, offline capability, and user friendliness, which means that it is a digitally inclusive
00:14:04
Speaker
option. Concerning CBDCs from other jurisdictions, I don't think we need a competitive advantage. I think they need to be interoperable. So as we have exchange rates for coins and banknotes at the moment, we might find a digital counterpart for this in the future.
00:14:29
Speaker
Thank you. I wanted to go back to something you said before. You mentioned privacy and indeed one of the most essential aspects of the potential design of the digital euro, as put forward by the European Commission, is its high level of privacy, which will be comparable with that of cash.
00:14:47
Speaker
Yet concerns have been raised both online and offline about EU policymakers allegedly anticipating the demise of cash and being able maybe to decide what retail customers will be able to spend their digital money on. We have also noticed that the European Commission recently ramped up its communication efforts on this, saying in the words of Commissioner McGinnis that this is not a big brother project.
Privacy and Anonymity Concerns: What are the Issues?
00:15:11
Speaker
Peter, in the next few months, negotiations will also involve potentially the European Parliament and we have already seen MEPs taking on board some of these concerns on privacy. How will the European Commission convince them that the digital euro will be private and how private will it actually be? Well, David, privacy is absolutely essential for any
00:15:38
Speaker
currency and any digital currency, any digital euro development. If it's not private, if people are not confident that their data, that their privacy is protected, they will just not want to use the digital euro and for good reason. And when we did our public consultations before issuing the proposal, it was interesting that it was the number one issue that came out. If we said, what are people really interested in?
00:16:08
Speaker
When it comes to digital euro, it wasn't about a designer. It should be crypto or not crypto. It wasn't even that they really wanted public money. They wanted privacy as a number one objective. And so users must have assurance that their privacy is protected, that any data
00:16:26
Speaker
will be processed in accordance with EU principles and EU law governing privacy. Because, of course, a digital euro is going to be digital, and anything that's digital leaves a digital footprint. And that sets it apart from cash.
00:16:46
Speaker
Pay in cash without leaving much of a footprint, although even cash leaves traces, cash smells apparently. So you can trace cash around its number, but it's quite hard. And everything you do digital leaves digital footprints that people may want to follow, may want to trace. But it's important to bear in mind that the central bank, as the issuer of a central bank digital currency,
00:17:16
Speaker
is not a commercial operation. They're not interested in snooping on people. They're not interested in harvesting data and selling them for whatever purposes. The central bank just is not interested in what people do, what people buy. They're interested in running a system and making a means of payment, a public means of payment available. Now, very important in this entire
00:17:44
Speaker
privacy discussion is that if you scratch a bit at the surface, a lot of people say they want privacy, but actually what they want is anonymity. And anonymity is not the same thing as privacy. Anonymity is that no one knows anything. And anonymity is very, very, very hard to achieve in a digital environment. And also, it can be problematic.
00:18:13
Speaker
For example, if everything is anonymous, it's becoming very difficult, if not impossible to counter, for example, illicit filings, money laundering, and so on. So anonymity isn't always available. And even if you pay in cash, in a number of our member states, if you pay large amounts of cash, your anonymity is going to be lifted. People will want to sort of say, well, where do you get this money from?
00:18:43
Speaker
What's the source? Who are you? Absolutely. If I may jump in, even if you pay small amounts like at the bakery, they still know if you have your mail, like how old are you approximately? Do you have children? Are you coming regularly? So they even have information about you if you pay with cash, right? So it's not
00:19:09
Speaker
Anonymity, like no information at all. It's never possible. Yeah, absolutely. Absolutely. And so people who say, well, we want a digital euro that guarantees anonymity, that's just not possible. It's not going to happen. And it's also undesirable. True. Yeah.
00:19:29
Speaker
I totally agree. Privacy plays a major role. As you said already, that's what citizens gave as a feedback to the ECB survey on the digital euro. For me, it means, of course, we have to answer the question, who has access to which data and when?
00:19:57
Speaker
It can be seen, however, in other digital applications that if user-friendliness is restricted by protection of privacy, the citizen is more likely to look at the applications and at privacy. And we saw it with the GDPR restrictions that normally everybody is accepting cookies without thinking about who is tracking what behind because
00:20:26
Speaker
they want to look at the website. So I think that user-friendliness is as important as privacy. We can't just think about anonymity and privacy on one hand without thinking about how to make it user-friendly and accessible anyways. I don't want to press a lot of buttons all the time before using the tutorial right to accept all possible tracking tools or whatever. So we need to have
00:20:57
Speaker
a balance between user friendliness and privacy. User friendliness for me means easy to understand handling.
00:21:09
Speaker
the practical use cases. So after all, why should I as a citizen switch to a new system if the old current system like Apple Pay, Paypal or Card Paying works very well? So I need to have a motivation to use the digital euro, right? And just to add on that also, I think we should mention that
00:21:35
Speaker
In parallel to the proposal on the establishment of the digital euro, the European Commission also published a proposal on the legal tender status of banknotes and coins, with the objective to strengthen their role in payments. So it's very important to see both proposals at the same time, to see that it's not at all the idea of a commission or an ECB to track the user at the end and the payment of the user, but to have
00:22:05
Speaker
a variety of payment methods offered by a central institution.
Role of Intermediaries in Digital Euro
00:22:15
Speaker
bouquet of flowers that we get from the ECB. Absolutely. That's very interesting. And if I can go back to that. And Sophie, you mentioned the user friendliness. I agree. That's very important. And you also mentioned the, you know, the the cookies that and, you know, all the pop ups that we get when we navigate online and all the clicks that we need sometimes to access websites, which are needed, but indeed hamper maybe the user friendliness. It seems like we haven't really gotten anything better than that so far. So
00:22:44
Speaker
What are the ideas maybe that are being floated with regards to the user-friendliness of the digital euro? Can it get better than that? Well, I'm not a tech expert, but when I get in touch with our experts at the DA, I know that there is like in the background possibilities that are checking several datas and tracking datas or just like, for example, let's say you want to
00:23:11
Speaker
buy cigarettes and cigarettes are just alcohol and you're just allowed to pay it when you're 18 or 16, depending on the country, I guess. Then there it just, it could ask, like the application could ask you, the digital wallet could ask you if you already have this age, right? So you can say, yes, I am 16, 18. And just for the transaction, so the
00:23:38
Speaker
Pei doesn't know at all if you're female and where you live or whatever doesn't have any more data, just one data about your age. And so there's a couple of background system possibilities which help with privacy and
00:24:00
Speaker
which can be replicated in the digital euro system, in the whole system, to be able to have a private solution. And for me as well, it's important to have not only just one institution that is taking
00:24:22
Speaker
care or is being responsible for the digital euro, but to have a couple institutions so that we have supervisors. That's the basic of a democratic system, right? We have the legislative, executive, and judicative system, and that's what makes it democratic, that we have supervision of different institutions and so on. And I guess that's something we need to establish as well in the digital euro ecosystem, that we have different
00:24:52
Speaker
players looking at the system and controlling each other also to make sure it's always on point and respecting democratic values. And to this point, that is also the reason why there currently is a legislative proposal on the table so that this is not a decision just by the ECB, but that the legitimacy of a potential digital euro
00:25:22
Speaker
comes from the European legislature, from the parliament and from the member states. The European Commission proposed it. The Council of Ministers and the European Parliament will decide. And that is entirely appropriate in a democracy where the rule of law governs. Also, the point on the user experience and the user friendliness, of course,
00:25:48
Speaker
whatever the digital euro will look like, it's not going to be a system that is end to end, run and manage and operated by the central bank. It's going to be placed in the market through intermediaries who will offer what they call wallets because that's the terminology for digital euro, which may or may not look very similar to accounts, but let's call the wallets. And these wallets will not be
00:26:15
Speaker
centrally designed, every bank that offers digital euro services or other intermediaries that offer digital euro services will provide their wallets and they will also compete on user friendliness. Now, of course, these wallets interact with people, with users, with the payee, and they need data, they collect data,
00:26:41
Speaker
when they have to conduct transactions. But it's very important that people who provide wallet services, providers wallets, they are also bound by the rules on privacy and data protection. They cannot use this data for anything else than the processing of the transaction. So the idea that this is going to become one big Hoover to suck up all this data,
00:27:09
Speaker
to then start micromanaging or micro-analyzing people's behavior. This really is stuff for Hollywood films or for people who believe in conspiracy theory, but it's not at all the intention and it's not at all the interest of the European legislature, of the European institutions, of the central banks and of the community around building eight digits of Europe to a successful outcome.
00:27:41
Speaker
Thanks very much. That's very interesting. Can we go back to the chat that we had earlier about the technology? Peter, you said that indeed different technological solutions are being considered for the digital euro and it looks like it will not be geared towards decentralized ledger solutions.
Consideration of Distributed Ledger Technology
00:27:59
Speaker
So can I just ask you maybe to elaborate on that? I would like to know what is in your view the stance of the European Commission towards DLTs and
00:28:08
Speaker
How much do you think this view is also informed or influenced by recent events in crypto? The European Commission's stance on distributed layers technology is that we believe it is transformational technology for the digital society. And we are, throughout many departments, very bullish on the technology and its potential.
00:28:35
Speaker
the web tree developments, who knows, the metaverse or the future of the internet in a more decentralized way will rely on distributed ledger technology. I'm absolutely convinced of this and so are many of my colleagues. But that doesn't mean that distributed ledger technology is the solution to every problem. It's very good for certain issues. It may be less good for other issues.
00:29:05
Speaker
And so now we've seen a number of events in the crypto space. And I think you are alluding to the collapse of important players there last year and earlier this year. And while these were dramatic, they actually had very little to do with distributed ledger technology. These were really very traditional examples of hubris
00:29:35
Speaker
poor governance, fraud, and so on. And while distributed ledger technology or crypto might have gotten a bit of a bad rap through it, if you look at what really happened, it was very old fashioned, poor financial management and poor governance. So we do not, or we have not lost our confidence in the potential distributed ledger technology.
00:30:06
Speaker
as a result of these events. But that does not mean that we think that distributed ledger technology is the only way to implement a digital euro. It is a way. It is not currently the front runner. It may never become the front runner, or maybe it does become the front runner. It really is too early to say, and it will depend very much on the next stage of the investigation and the trials and the testing
00:30:33
Speaker
to see what system really is the best for the best outcome of a digital euro in the best interest of citizens, what really gives citizens the best experience, the most powerful digital euro. That really is going to be the determining factor, not the technology, but what gives the best result for the user.
00:30:59
Speaker
Thanks, Peter. I wanted to turn to Anne-Sophie maybe just to elaborate a bit more on the decentralization aspects. Anne-Sophie, do you think that a CBDC could ever incorporate some of the benefits of decentralized currencies? And how decentralized could central bank money ever be?
00:31:19
Speaker
Well good question. At first glance it certainly seems contradictory that a centralized institution is using a decentralized infrastructure to release a digital currency. We need to ask the question, what is the benefit of decentralization?
00:31:36
Speaker
Is it about security, about trust or something else? If we talk about, also the question is, is it about distributed ledger technology or decentralization may be also in excess, like we have intermediaries who will give out the digital euro probably, different
00:32:01
Speaker
intermediaries. And so this is also a kind of decentralization, right? So I guess the question about how to use distributed ledger technology for CBDCs, you may answer this question better than I can. But yeah, as Peter already said, currently it looks like the ECB doesn't want to use a distributed ledger technology. And for other purposes, we have some kind of decentralized
00:32:31
Speaker
systems as well, right? As I said, access is one, and also responsibilities and supervision. It's all about different institutions being part of the whole system. So we have some kind of decentralized system, but maybe not in technology. On this point, I think it's important that, of course, it's going to be a payment system, and payment systems are decentralized.
Centralization vs Decentralization
00:32:58
Speaker
You have lots of intermediaries, but it's clear that
00:33:00
Speaker
As it's going to be public money, it's going to be issued by a central authority, a central entity, the central bank. So decentralized issuance is not possible for a digital euro, because then you'll have private money. Private money can be decentralized issued. But public money is centrally issued. But it can be decentrally distributed and used.
00:33:25
Speaker
And that's a great segue to the next question that I had about intermediaries. By design, private banks will also act as intermediaries between retail customers and the digital euro. They don't seem thrilled by it so far, maybe. They will need to provide additional services for a very low or near zero retribution. Plus, they fear that the digital euro will divert flows from bank deposits.
00:33:50
Speaker
On the other hand though, merchants and businesses in Europe may benefit from faster, frictionless payment services with no fees. So, Peter, can you maybe elaborate a bit on what value will the digital Europe be bringing to private intermediaries? Well, I think that intermediaries that are in the business to stay want to offer services that their customers want and need.
00:34:19
Speaker
If they're focused on providing the services that gives them the most revenues or the least costs, and not on what the customers really want, I don't think there is a long future. And we see that people in the EU, throughout the EU, have a lot of confidence in public money, much more confidence than in private money. And therefore,
00:34:45
Speaker
That's why we're working on a digital euro so that to have the public money option and technical terms, the digital euro will be a claim on the central bank to have that available. And I would expect that banks that care or financial intermediaries that care about their customers would want to offer and would want to intermediate the services and the products that the customers want.
00:35:14
Speaker
and need. And if they fail to do that, they're going to have unhappy customers and their possibility to make profit from servicing their customers, which is ultimately the purpose of their activity, is going to suffer from that. So I think that a lot of this debate is turned around and saying, well, how much is it going to cost us to distribute
00:35:44
Speaker
the digital euro and how much money are we going to make on it. I think that's the wrong way to look at it. I think that in a digital society, the intermediary should look what services do our customers want and how can we provide them better and cheaper than the colleague next door or across the street or across the border.
00:36:10
Speaker
Thank you. And Sophie, I'm turning to you now. You have defined yourself as a CBDC maximalist and part of your work is also advising policymakers on the best design for a potential digital euro.
Design Principles and Future Expectations
00:36:24
Speaker
Can you let us know what the best design for a digital euro would be and how feasible would that be?
00:36:31
Speaker
Yeah, I think every center bank must first ask itself what task its CBDC should fulfill and why it wants to issue a CBDC. So what is the motivation for CBDC? And this is also where I see my current role. I ask questions to help answer the question on the best design for each motivation. So best design differs from country to country and
00:36:59
Speaker
But that said, there are two important fundamental building blocks that I would always want to put in place. First, a CBDC must imply democratic values for me, so distribution of responsibilities, as we said before, and supervision among different institutions, and based on fundamental rights.
00:37:20
Speaker
as we already talked about in the privacy part of this podcast discussion, that of course we want to keep the fundamental rights for the citizens. And second, we have seen in recent years how rapidly technologies are developing.
00:37:45
Speaker
It is therefore important that the CBDC is based on a system that is developable and not obsolete in 10 years. So we need to keep it as open as possible for developments and updates so that we can, yeah, we will still always have a modern system. Peter, do you want to elaborate on that as well?
00:38:11
Speaker
I think that's very well said and very important to what Gansby mentioned there, is that we don't develop a new public currency every day. So once every few decades, if not more, that will have a development like this. And if you go with this, you have to develop something, you have to implement something that is going to be ready for many
00:38:41
Speaker
years, decades to come. And that can be adapted to the technologies that we have no idea where, for example, decentralized technologies and distributed ledgers are going to go and how important a role they will play in the future. But if big parts of our economic activity or our online activity
00:39:08
Speaker
is web tree-based is decentralized. I don't know whether that will be the case, but if it is the case, it would be very sad and concerning that a digital euro could not play a role in that because it can't operate in a decentralized environment. So therefore, any design has to cater for the possibility of decentralization.
00:39:38
Speaker
That said, a lot of the decentralization potential is in the future. It may or may not happen. And responsible policymaking and responsible design also has to reflect on what is currently possible. What can we do? What are we confident in that will work and that can work? And this is incredibly difficult.
00:40:02
Speaker
It's incredibly difficult to make the right choice because it's, of course, easier to go for something that you know and you have a lot of history on because you're familiar with it. But by looking only at what you know very well, you may be blind to what is coming. Absolutely.
00:40:24
Speaker
I think I want to go back to something you mentioned. As you said, Peter, the current scenario, especially in technology, can change and evolve very quickly. I have one final question for you both. What are your expectations from the ECB's current investigation phase and from the upcoming policy negotiations? What are your three wishes for digital Europe?
00:40:48
Speaker
Well, I'm very angry. First, Ansophie is a digital euro maximalist. I am a technology maximalist. I am very confident that all of the technology investigations that the ECB is doing will demonstrate that all of these technologies can work because the most important part of digital euro is not the technology.
00:41:13
Speaker
It is the confidence that the central bank gives to it and the confidence people have in the central bank. That's far more important than technology. All of these technologies will work. And they all have their advantages and disadvantages. So what I really expect or hope and what I have hoped for is that now that we're moving to the policy debate, the democratic debate in council and parliament, is that the conspiracy theorists will not
00:41:43
Speaker
take over the discussion and turn it into a game. It is a very difficult discussion. There's a number of fundamental issues at stake. And so these need to have a very deep and profound discussion. That takes time. So for those who think that because we want the digital euro, we think digital euro is necessary,
00:42:09
Speaker
Therefore, the legislative process must be conducted in a rush. I think they're going to be disappointed. I think the parliament and the council will want to take their time because we don't want it fast. We want to get it right. And that's much more important. So if this thing takes a bit of time, do not see that as a failure, but see that as a sign that people are really interested in doing it in the right way, in the best way,
00:42:38
Speaker
for users. And so I very much hope that the conspiracy theorists will therefore get bored with this very technical and fundamental debate because there is no joy to be had in it for them.
00:42:56
Speaker
And Sofia, turn to you. What are your three wishes for the digital euro? Maybe also two. Thank you. Yeah. As I would take the user perspective. So for me, first of all, we need a clear definition of the use cases for citizens. So we need to know what the digital euro exists for. Why should I use it, right?
00:43:20
Speaker
So then the involvement of all relevant stakeholders in the discussion, so not only intermediaries, but retailers, consumers, all consumers. So from children to deaf people, to blind people, to workers, whoever, like consumers for me is like a very broad group of people and merchants.
00:43:46
Speaker
And third, a clear delineation. So I think we need to make clear which problems should not be solved by the digital euro, but could be solved by other forms of money as well. So for me, a digital euro doesn't need to solve all problems within payments, like from micro payments, industrial payments, and so on. I think we need to make sure that we have one
00:44:16
Speaker
clear goal for the digital euro and that we don't try to solve all problems, payment problems, digital payment problems in the world. That's a very good conclusion. And actually, that's a wrap up. Thank you very much to you both for joining me today. Thank you for the invitation and it's a very interesting discussion.
00:44:42
Speaker
Absolutely. And I hope our listeners have enjoyed or will enjoy our conversation as much as I have today. And we look forward also to hearing what's next for the digital euro. I take the opportunity to invite our listeners to listen to our other podcast episodes and follow us on social media. And until next time, goodbye.
Conclusion and Call to Action
00:45:06
Speaker
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