ECB must grant e-money issuers access to the central bank reserves, the fintech company Monerium argues
The fintech company argued that the route to a digital euro is simpler than that proposed by the ECB and the European Union; along with Iceland, Lichtenstein, Norway, and the UK, there is already a framework for digital currency — namely e-money.
Monerium, the first company authorized to issue e-money on blockchains published the blog as a response to the ECB’s recent public consultation on the digital euro. It argued that all Europe needs to do is to recognise that it already has “a proven form of digital euro”.
The fintech company which focuses on bridging fiat money with blockchains by issuing programmable digital cash, explained that Europe already has a proven and trusted framework in place for issuing digital currency through e-money. Further, e-money forms an integral part of the proposed Markets in Crypto Assets (MiCA) regulation, it added.
In 2000, the European Commission had described e-money as a “digital alternative to cash,” issuing a directive that defined it as “technically neutral,” an “electronic surrogate for coins and banknotes.” Based on the foundation of this framework, Monerium argues that “The only thing that the ECB needs to do to give e-money comparable status to physical cash is to grant e-money issuers access to the ECB’s reserves”.
Monerium explained that integrating the digital euro with existing e-money issuers is preferable to the ECB directly issuing digital currency to households and non-financial corporations, as direct issuance would entail a radical overhaul of the existing system. The fintech further pointed out a report from two International Monetary Fund economists that proposed that non-bank providers could issue digital money with the central bank’s backing.
Europe’s e-money framework already abides by IMF’s key criteria for a stable digital currency, Monerium explained. The move from e-money to an sCBDC would mean that e-money issuers be granted access to the central bank and ECB reserves.
“Such access would be consistent with preserving a ‘level playing field between electronic money institutions and credit institutions’ as stipulated by the e-money directive,” the blog stated.
Further, the proposed mechanism can give Europe a headstart towards digital currency infrastructure, Monerium argued. “With e-money serving as sCBDC, Europe can take the lead in setting global standards for digital money and in fostering private sector fintech innovation to the benefit of European consumers and companies,” it stated.
Written By Harshini Nag