The Irish government is considering the launch of a digital euro, and economist Ignazio Angeloni has been commissioned to assess the preparations for the currency’s launch. Angeloni has identified ten issues that a “prospective digital euro” (PDE) will face, with a focus on the potential downsides.
One of the main concerns is the impact on financial stability, as a digital euro could potentially increase the risk of bank runs. There is also the possibility of cyber attacks and other security threats that could disrupt the currency’s operation. Additionally, the digital euro could lead to increased surveillance and loss of privacy for users.
Another issue is the potential impact on the banking sector, as a digital euro could potentially disintermediate banks and reduce their role in the financial system. This could have a significant impact on the profitability of banks and the overall stability of the financial system.
Despite these concerns, there are also potential benefits to a digital euro. For example, it could increase financial inclusion by providing access to banking services for those who are currently underserved by traditional banks. It could also reduce the cost and complexity of cross-border payments, making it easier for businesses to operate across different countries.
Overall, the decision to launch a digital euro will require careful consideration of the potential risks and benefits. The Irish government will need to work closely with the European Central Bank and other stakeholders to ensure that the currency is launched in a way that maximizes its potential benefits while minimizing its potential downsides.
In conclusion, the launch of a digital euro is a complex issue that requires careful consideration of the potential risks and benefits. While there are certainly concerns about the impact on financial stability, privacy, and the banking sector, there are also potential benefits in terms of financial inclusion and cross-border payments. The Irish government will need to work closely with the European Central Bank and other stakeholders to ensure that the currency is launched in a way that maximizes its potential benefits while minimizing its potential downsides.
