Several European Union member states and the European Central Bank (ECB) are in a bitter dispute over the new rules governing the new digital euro currency, with a fight for “political supremacy” ongoing.
Despite appearing like a debate about dry technical minutiae, the ramifications of decisions taken over the digital currency are vast and raise fundamental questions about EU member states’ sovereignty.
There are a number of concerns. One is that EU citizens may take unkindly to having a digital currency imposed upon them by unelected technocrats in Frankfurt. One Brussels-based executive told Politico: “You can create something in an ivory tower, but will it actually be used in a market?”
There are also fears over the unintended consequences of the cap placed on how much digital currency EU citizens can carry in their “wallets”.
Raise the cap too high and EU consumers could pull huge sums from traditional banks into their digital wallets during a crisis. This, in turn, would spark widespread financial chaos and even jeopardise the banking system itself.
Then there is the concern that if member states set the limit, they could set the limit too low and become a de facto “Big Brother” state, exerting tight controls on the financial freedom of its citizens.
One diplomat told Politico, the battle between the ECB and EU members over who sets the limits and at what point, exposes a fundamental “battle for power” between sovereign states and technocrats.
Germany, France and the Netherlands are chief among the complainants to the ECB, arguing for greater control for member states.
According to Politico, which claims it has seen notes on this subject, it was argued that the ECB’s role as designer of the technology should not serve to “limit” the “decision-making power” of member states.
The outlet reports that one solution could be that member states define the parameters for the ECB to set the limit on what citizens can carry in their wallets, but ultimately Christine Lagarde and Frankfurt would have the final say.
