IIF Rates European Commission's Digital Euro Legislation: Room for Improvement : omgfin

The Institute of International Finance (IIF) assesses the European Commission's proposed digital euro legislation, highlighting areas where improvements are needed. This evaluation delves into key aspects of the legislation, including financial stability mechanisms, cost-benefit analysis, privacy controls, and governance. Discover the IIF's insights and recommendations for refining the digital euro framework.

IIF Evaluates European Commission's Digital Euro Legislation: Identifying Areas for Enhancement

The Institute of International Finance (IIF), a global financial industry advocacy group, has conducted an assessment of the European Commission's proposed legislation concerning the digital euro. While recognizing the significant step forward in digital currency development, the IIF's evaluation reveals several areas that require improvement within the legislation.

The IIF's evaluation focused on seven critical areas within the digital euro framework. Here's a breakdown of their findings:

Cost-Benefit Analysis: The IIF noted that the cost-benefit analysis presented in the legislation was somewhat basic and high-level. Additionally, some aspects relied on previous studies or were altogether missing.
Financial Stability Mechanisms: The proposed bill introduces the concept of holding limits for financial stability and bank intermediation. However, these limits are yet to be defined, and their enforcement mechanisms remain unclear.
Economic and Liability Model Challenges: The legislation places caps on fees that payment services providers (PSPs) can charge for implementing digital euro services. This could result in economic and liability challenges, as PSPs may struggle to recover their implementation costs.
Privacy Controls: Privacy controls regarding the digital euro are undefined, leaving PSPs uncertain about the requirements they need to meet and their feasibility upon the digital euro's introduction.
Anti-Money Laundering and Cybersecurity Measures: The legislation lacks clear provisions for anti-money laundering and cybersecurity measures, which are crucial components of a digital currency framework.
Governance and Conflicts of Interest: The IIF pointed out that the legislation does not address governance issues or conflicts of interest. As the European Central Bank (ECB) plays multiple roles, including bank supervisor and digital euro operator, independent oversight is necessary.
Interoperability: The IIF emphasized the importance of interoperability, suggesting that creating parallel systems with similar challenges and expenses may not be the most effective approach.

While the European Commission's efforts to introduce the digital euro are commendable, the IIF's evaluation underscores the need for further refinement to ensure a comprehensive and effective framework. As the digital euro continues to develop in parallel with its infrastructure, addressing these critical areas will be pivotal to its successful implementation.

The digital euro is currently in the investigative phase, with potential testing of technical and business solutions on the horizon. However, the live issuance of the digital euro can only occur after the legislation has been passed, marking a significant milestone in the evolution of digital currencies in Europe.

(DEREK ANDERSEN, CoinTelegraph, 2023)

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IIF Rates European Commission's Digital Euro Legislation: Room for Improvement Print

IIF Evaluates European Commission's Digital Euro Legislation: Identifying Areas for Enhancement

The IIF's evaluation focused on seven critical areas within the digital euro framework. Here's a breakdown of their findings:

Cost-Benefit Analysis: The IIF noted that the cost-benefit analysis presented in the legislation was somewhat basic and high-level. Additionally, some aspects relied on previous studies or were altogether missing.

Financial Stability Mechanisms: The proposed bill introduces the concept of holding limits for financial stability and bank intermediation. However, these limits are yet to be defined, and their enforcement mechanisms remain unclear.

Economic and Liability Model Challenges: The legislation places caps on fees that payment services providers (PSPs) can charge for implementing digital euro services. This could result in economic and liability challenges, as PSPs may struggle to recover their implementation costs.

Privacy Controls: Privacy controls regarding the digital euro are undefined, leaving PSPs uncertain about the requirements they need to meet and their feasibility upon the digital euro's introduction.

Anti-Money Laundering and Cybersecurity Measures: The legislation lacks clear provisions for anti-money laundering and cybersecurity measures, which are crucial components of a digital currency framework.

Governance and Conflicts of Interest: The IIF pointed out that the legislation does not address governance issues or conflicts of interest. As the European Central Bank (ECB) plays multiple roles, including bank supervisor and digital euro operator, independent oversight is necessary.

Interoperability: The IIF emphasized the importance of interoperability, suggesting that creating parallel systems with similar challenges and expenses may not be the most effective approach.

IIF Rates European Commission's Digital Euro Legislation: Room for Improvement Print

IIF Evaluates European Commission's Digital Euro Legislation: Identifying Areas for Enhancement

The IIF's evaluation focused on seven critical areas within the digital euro framework. Here's a breakdown of their findings:

Cost-Benefit Analysis: The IIF noted that the cost-benefit analysis presented in the legislation was somewhat basic and high-level. Additionally, some aspects relied on previous studies or were altogether missing.

Financial Stability Mechanisms: The proposed bill introduces the concept of holding limits for financial stability and bank intermediation. However, these limits are yet to be defined, and their enforcement mechanisms remain unclear.

Economic and Liability Model Challenges: The legislation places caps on fees that payment services providers (PSPs) can charge for implementing digital euro services. This could result in economic and liability challenges, as PSPs may struggle to recover their implementation costs.

Privacy Controls: Privacy controls regarding the digital euro are undefined, leaving PSPs uncertain about the requirements they need to meet and their feasibility upon the digital euro's introduction.

Anti-Money Laundering and Cybersecurity Measures: The legislation lacks clear provisions for anti-money laundering and cybersecurity measures, which are crucial components of a digital currency framework.

Governance and Conflicts of Interest: The IIF pointed out that the legislation does not address governance issues or conflicts of interest. As the European Central Bank (ECB) plays multiple roles, including bank supervisor and digital euro operator, independent oversight is necessary.

Interoperability: The IIF emphasized the importance of interoperability, suggesting that creating parallel systems with similar challenges and expenses may not be the most effective approach.

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