CBDCs Could Need Global Regulation, EU Commissioner Says
Central bank digital currencies (CBDCs) could require a network of international deals to stop state-backed money from infringing on other countries’ sovereignty, European Union Commissioner Paolo Gentiloni said on Monday.
The bloc is currently considering a digital version of the euro – but needs to confront design issues such as how it will work for cross border payments.
“How do you avoid the risk of infringing the sovereignty of other jurisdictions through a digital currency… while developing a digital currency with global ambition, as the digital euro will be?” said Gentiloni, who is responsible for economics at the European Commission, the EU's executive arm. Gentiloni was speaking at a conference on the digital euro, organized by the Commission and the European Central Bank.
“This, of course, brings the possibility of specific agreements with other jurisdictions regulating this kind of dimension,” he added.
In October 2021, the group of seven major industrialized nations warned that those developing digital versions of fiat currency would need to be wary about treading on other jurisdictions’ toes.
EU policymakers have also raised the risk that too-easy access from overseas could undermine the currency, akin to the dollarization of states that adopt U.S. currency without the Federal Reserve’s permission.
The International Monetary Fund has also raised the possibility of an international CBDC platform which could ease cross-border payments, currently beset by delays and costs.
Gentiloni’s remarks at a conference in Brussels drew an immediate response – including from The Bahamas, one of the few countries that’s already rolled out its own CBDC, known as the Sand Dollar.
“It is critical that any cross-border initiative, taken in regards to the work on CBDCs, reflects an inclusive approach to the needs that will be expressed by the Bahamas and small countries in this arena,” John Rolle, governor of the Bahamas’ central bank, told the conference.