Queen Maxima of the Netherlands has outlined multiple benefits central bank digital currencies (CBDCs) could bring, particularly in the area of financial inclusion. “Governments could use a digital euro to channel financial support to low-income households. This would deepen longer-term inclusion, and act as a gateway to other financial services,” she said.
Queen Maxima Envisions a Better Future With CBDCs
Queen Maxima of the Netherlands talked about central bank digital currencies (CBDCs) Monday at the “Towards a legislative framework enabling a digital euro for citizens and businesses” conference. She is the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA). The conference was jointly organized by the European Commission and the European Central Bank (ECB).
Focusing on financial inclusion and how a digital euro might “benefit underserved groups,” Queen Maxima explained that “Traditional financial services have created roadblocks for inclusion,” citing high transaction fees, minimum account balances, and onerous document requirements.
She added, “New digital financial services suffer from a low level of trust, poor customer experiences, and the lack of digital capacities among some groups,” elaborating:
While CBDCs are not the only way to overcome these barriers, they can help: both encouraging providers to lower costs and broaden access, while also incorporating the advantages of central-bank money — such as safety, finality, liquidity, and integrity.
Noting that CBDCs could also “offer benefits for social policies,” she described: “Governments could use a digital euro to channel financial support to low-income households. This would deepen longer-term inclusion, and act as a gateway to other financial services.”
Nonetheless, she warned that the benefits that CBDCs could bring “are not automatic,” suggesting:
The implementation of any CBDC could be accompanied by policy reforms and safeguards, to address difficulties and risks. These include overcoming low levels of financial and digital literacy, and operational challenges, including cybersecurity.
“The design of CBDCs could give people more control over their transaction data, and the ability to share it with a wider set of financial service providers,” she further opined. “This could support envisioned innovations from the Digital Markets and Digital Service Acts.”
In conclusion, Queen Maxima said:
I am encouraged by the technical work and ongoing consultation by the European Central Bank … So let us envision that better future and build a digital euro that works for all Europeans.
The Eurosystem has launched the investigation phase of a digital euro project and the European Commission has announced a legislative proposal on a digital euro for early 2023.
ECB Chief Christine Lagarde said in February that a digital euro will not replace cash but could offer a convenient, cost-free means of payment. In September, the ECB chose Amazon and four other companies to help develop a digital euro.
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