BBVA executive raises concern over the adoption of digital euro and states that there is a need to create a flexible framework that will encourage public-private partnership.
An executive at Spanish Bank BBVA has advised caution and pragmatism in the development and adoption of the digital euro. The executive, Pablo Urbiola, made this known while speaking at the European Banking Federation Seminar.
While the plans for a central bank digital currency in Europe are still in the idea stage, many banks, including BBVA, have shown significant interest with some even running pilot tests to see its workability.
Urbiola believes the ECB is right to be considering the possibility of issuing a general cryptocurrency. Such positioning, he stated, will help the bank take advantage of the expanding cryptocurrency ecosystem and the increased adoption by many individuals. However, he queried what advantage the digital currency would have over other available alternatives if introduced.
He said:
“It is not clear which customer demand a digital euro could fulfil that may not be fulfilled by other initiatives.”
Framework to Improve Demand for Digital Euro
Urbiola believes there is a need to explore different design options for the digital euro, taking stock of the opportunities and risks involved in adopting one. He suggests that the framework for the development of such a currency must be flexible enough to allow private players.
Leveraging the abilities of the public-private sector via a cooperative effort encouraged by such a framework will allow private actors “…develop business models in a competitive space.”
Earlier in the week, The Bank for International Settlements had also emphasized the need for a public-private partnership in CBDC developments. The partnership will see that central Banks ensure infrastructural stability while the banks and Fintech companies will compete regarding customer service provision.
Urbiola’s caution comes just after the ECB declared it was considering using the digital euro to combat the surge in using digital currencies for international payments. According to ECB’s annual review published in June, this move was being chaperoned by foreign tech giants.
The executive expressed confidence in his bank’s preparedness for the digital euro, stating that BBVA had taken part alongside 15 other major banks in a preliminary trial run of a digital currency.
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