The European Banking Federation (EBF), Which Describes Itself As The Voice Of The European Banking Industry, Expressed Support For A European Digital Currency And Made Some Further Recommendations

The European Banking Federation, which represents 3,500 different banks as well as 33 national banking organizations, published a report outlining the European Banking Federation's (EBF) vision for the retail digital euro, and the future digital money ecosystem, in general. The meticulously crafted report articulated commercial banks' ideals and worries regarding the digital euro.

The report, which went live on March 28, showcased the bank's values, including security and confidentiality.

In order for Europe to have a working digital euro, however, the EBF calls for a deeper public-private partnership. The document stated that "at this time, there is no dialogue in place to address the fundamental changes and risks to the monetary and financial system". The EBF report also states that a framework for ongoing high-level participation was necessary.

On the other hand, The EBF ecosystem vision strongly emphasizes on the private sector's active work to jointly develop products in all areas, starting with infrastructure, as Europe needs to rely less on foreign "actors", and develop its products in-house.

Among the three most important components of that ecosystem would include the digital euro, a wholesale central bank digital currency (CBDC), and bank-issued money tokens.

The EBF believes that the digital euro should have three levels: a European Central Bank role, two industry levels, and an "Industry Level B" that "would be subsequently developed and operated by the private sector, in compliance with the principles set out in the previous layers." The first industry level, at least on paper, should interact with the Single Euro Payments Area. These ideas, however, have not yet been completely developed, and are still in their early stages.

“The European market needs the authorities to clarify the interaction of different and converging policy objectives, especially when it comes to the development of pan-European payment solutions at the Point of Sale / Point of Interaction.” the paper stressed.

The study, on the other hand, very carefully mentioned blockchain technology only in relation to specific elements of its hypothetical ecosystem. It is believed that a wholesale CBDC would run on distributed ledger technology (DLT), where interoperability is essential for enabling cross-border transactions with central bank money.

Furthermore, the EBF's vision for "enterprise demands such as automated industrial processes that run on DLT and use smart contracts" places a high priority on bank-issued money tokens. These tokens tightly correlate to Digital Euro Scheme Industry Level B. The article emphasized that these methods would also require more standardization, as well as clear regulatory frameworks.

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