Why we Need a Digital Euro | Evelien Witlox (ECB)
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- เผยแพร่เมื่อ 31 ก.ค. 2024
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More info about the Digital Euro: www.ecb.europa.eu/paym/digita...
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Timestamps:
0:00 - introduction
0:46 - sponsor
1:37 - why Digital Euro
16:28 - what changes for consumers
30:55 - impact on financial system
47:01 - privacy
55:45 - programmable money
58:55 - will cash disappear?
59:50 - final discussion
MAIN CHANNEL:
/ moneymacro
Guest: Evelien Witlox (ECB)
Host: Dr. Joeri Schasfoort @Money & Macro
Greatly appreciate all the caption options!
I well and truly enjoyed every minute of this. Your conversational (back and forth) style lends to far more detailed interviews compared to other interviewers. Thank you.
Thank you so much! Very happy to hear that.
@MoneyMacroTalks it called for more questions in me than she was willing to answer. She never answered your Q why the need for a cbdc? And that alone makes me suspicious that all is not well in the famous kingdom
This was absolutely fantastic , I have long misunderstood the concept or need for a digital dollar or digital euro.
Thank you both!! So cool Money and Macro has access to officials like this. Bravo. 💵
Super informative. Thank you so much!
Thank you Joeri ans Evelien for the very insightful and educational interview. Thoroughly enjoyed it!
OMG. This interview is amazing. I even think as you are not being a professional interviewer, that gives lots of extra depth but in an easy understand form.
BTW. I can believe Europe is so behind in digital payments. The EU needs to accelerate faster than light in this.
Behind? Who is in front? EU is not a centralized state. In my country of Czechia, you can pay instantly between banks for FREE. From phone to phone, using QR codes if you want. I wonder what are we missing? Apps for merchants? Instant transactions in the Eurozone? Or what do you have in mind? I agree EU has a lot to improve, but I don't feel like in a financial backwater or something, especially when I visit the USA or some Asian countries. Can you please elaborate on your point?
This is great! Thank you.
an excellent interview! I learned a lot, and enjoyed my time doing so. There is room for improvement on the technical side (audio balance & quality) but those can be smoothed out in future ones, the conversation quality is already so high. I’d love to see you do more of these.
Thank you!
Thank you for your feedback, will sort out the audio issues
Thank you for your top notch content. 🙂
Excellent interview. Thanks a lot!
The offline bit is interesting, but the only reason I would ever use it is if it's more private then regular bankcontact.
Yeah. I was thinking about this a little bit more after the interview. If they would offer an anonymous disposable card that can hold small amounts, I would totally use that
@@MoneyMacroTalks The EU or any government would never pass up the opportunity to spy on its citizens.
Super good interview, loved it. Not bought into the digital EUR train ...
Im excited for public options to big tech infrastructure to start coming online
I may have missed it but what is the practical mechanism for tendering physical currency for conversion to digital currency? If I had a 100 euro banknote I wanted to convert to digital euro would I go to a private bank and surrender it there? In other words would the ECB require private banks to process the conversion/transaction and issue the digital euro even for non bank customers? And wouldn't assigning private banks that role negate the proposed accessibility gains of a digital euro for the underbanked/underserved population?
Indeed it works via private banks at first.. Yes you are right that this potentially undermines the accessibility argument. But, they do imagine that a government run Identity also offers access in every country (e.g. the post office).
Not just banks. "Cash in/Cash out" can be operationalized through a variety of means, eg through kiosks, merchants, even street vendors/brokers. Because CBDC is legal tender, there should be low/no acceptance risk, so it can be done.
The privacy problem here isnt that they need to explain how it can be private. That is easy.
The true question is how they will prove it is private.
A great example is: Yes you can blindfold yourself and then its private. Thats easy. Now prove that you have the blindfold on all the time and you cant take it off.
A governmental agency or a "independent" auditor doesnt need to look into the european central bank. The PUBLIC needs to be able to look into it.
A great start is opensourcing everything involved here.
Security through obsurity is bad anyways. Just open source it half a year before releasing so you can have the public tell you fixes.
Trust can be established through independent audits, disclosure requirements, etc. Digital systems tend to be much more transparent because math!
I wish we were still in the EU 😢🇬🇧
I still don't quite understand how the private offline transaction works. If phone A is offline and then send money offline to phone B (also offline), and then phone A going online but phone B isn't, it will update the ledger of Digital Euro just from the phone A data but not from phone B so the ledger will not be balance?
Good question! I don't think they completely worked out that part when I visited. I could imagine it works by preloading some money onto your offline wallets and so then you can only spend that money when offline.
Cbdc start in Zwitserland whit six banks in one december!
Why does the ecb want to provide an alternative to cash, free, for the good of society? If the answer is competition from power players, ok, but the introduction of such a system surely requires a substantial investment that will have to be paid back at some point. The ECB is not an philantropic organization, so who will pay, and how?
They told me transaction fees will have to cover the costs (lower than what visa charges though)
Audio is left biased. Impossible to listen to on headphones.
Only for the introduction I think, right? My bad forgot to re-adjust the microphone after the interview
@@MoneyMacroTalks Ah ok, I'll listen to the beginning on speakers at home. I really like your channels, you do great work.
Have you tried using a single headphone?
First World problem..
@@jenniferconroy4517 so unless it's directly helping a starving person avoid dying of hunger, it's pointless to address?
The real answer is that if your bank goes bankrupt you are not treated as a creditor but an investor and you are at the back of the queue for payment by the liquidator with the only money you are guaranteed to receive is the amount insured by your Government. This applies to cash or bank digital money. With the ECB money both cash and digital you are a creditor of the bank and if it crashes so does the whole economy. The other reason is the move for companies and banks to create their own crypto currencies and this means the Central bank loses control over the money supply and hence economic activity leading to financial anarchy. This is why Bitcoin and other crypto currencies cannot be treated as currencies in the real economy but speculative assets. The programable aspect of the digital Euro will come from the retail bank end where they may insist on using their programable wallet which will control how the digital Euros are spent.
I was all for this digital currency until 38:40 , when she reveals you can’t actually cash out digital euros from your bank account to your wallet- only a tiny amount that will be monitored! Cash has a big advantage here: you can take cash out of your bank and save it at home if you want.
It seems like the biggest driver of the digital currency is the institutions, wanting to take power away from people and further control them , by limiting their access to money and recording every transaction. It is a prequel to eliminating cash.
That's an initial policy decision by the ECB, probably to placate the initial fears by banking institutions of bank runs. In time, it will likely be relaxed significantly. Other CBDC systems have taken a different route where you can connect your online bank account with your central bank issued digital wallet from day 1 and have funds exchanged back and forth.
The joke is even in current system, the cash out is limited. You can ask Greeks who already cannot withdrawal more than a few hundred euros each day during the Euro crises.
I don't think is very different from the system we currently have. Cash use is already limited and large cash deposits & payments are already monitored to combat money laundering, terrorism, and tax evasion. Don't get me wrong this concern is very valid. But, it's not something that is new with CBDC.
Nice shoes!
Thanks!
I don't get it, is the ECB going to offer free bank accounts with a digital payment options for everyone? isn't this much better than what most banks offer?
Yes that is the plan. But, the interest rate will likely be lower than what a bank offers, the money you can hold in it is capped (e.g. at €3000), and you still will get access to it via your bank.
@@MoneyMacroTalks Currently in spain most banks offer no interest and instead charge around 60euros a year to have an account unless you have your salary deposited there or have saving in a fund or similar. In theory they should offer a free option but in practice is hard to access it.
yeah I think this is what Evelien means when saying that a public option can keep commercial players on their toes (they really need to up their game)@@HallBr3gg
@@HallBr3gg Seems surprising. Why isn't there a new company coming in offering safe +3% interest rate account and getting millions of clients overnight? Is the market just crazy regulated that there is no way for innovative company to enter?
@@maxintos1 Online banks might do that, but most ppl don't know them or don't know/ are too lazy / just can't make the switch.
So instead of Visa that works worldwide we will get incompatible regional systems. Like in Thailand they have local QR payments and it's impossible to get account for tourists so it will actually make payments worst for the international world wide scope
That is a risk. But, there are a lot of central banks working on making their CBDCs compatible in an attempt to make FX transactions cheaper.
I see it more like unifying the European systems. For example Germany has EC Cards, which are a dying format. Visa & MasterCard Debit take over. By creating a unified system all over Europe we can build a block that could keep those at bay.
i'm really really curios how *offline* digital euro works. It's really hard/impossible to build OPEN offline system....
Bitcoin is digital and can be stored offline
@@TheAdamAdy i mean offline transactions
@@albertobissacco In theory, you could allow offline digital transactions, but you would need to verify them online anyway, sooner or later
What about EPI?
There are deff. alternation that I do if I was in charge of this. But that said, it is better then nothing
Audio 🎧 sterio issue
Sounds like a good proposal. I'm in favour.
It's very interesting that they say a fully private transaction model is possible and that it's a political issue. I can see why it is a political issue too.
Thank you for an interesting interview. I think the solution in itself is interesting, however it does seem as if it basically is a public funded payment method protected and enforced by law. Some private companies might benefit while others might not. The costs might not be applied (entirely since she did mention merchant fees) to consumers in the form of increased prices of goods and services, but they will be indirectly through tax. From an economic standpoint, is subsidized services competing with private actors good or bad for competition?
Also the discussion about privacy is interesting, but with her saying banks would be psps and account service providers I do not see how anything would change since that implies the current legislation both in terms of anti-fraud and anti money laundering will still apply. Not that I think it should have to change. In many ways I think the legislation currently does too little to help fighting aml and fraud.
Would be interesting to do a video to compare and contrast to Chinese WeChat payment system. Also would the digital euro system be open to tourists from US and eg China. Btw WeChat system is very closed to foreigners.
WeChat Pay is completely different from a CBDC (which is why the People's Bank of China has its own eCNY CBDC). WeChat Pay is an e-money system like PayPal or Venom. Fundamentally they are tied to the regulated, intermediated financial system (banks). The "money" that flows through their networks are not fiat in nature and are interconnected and interdependent accounting entires. True CBDC (at least in tokenized form) would be fiat money and legal tender in nature. Try going to a bank to convert your WeChat Pay bucks into physical currency - they will not accept it.
@@mensrea1251 I get that they are technically different. In practice though both systems are providing a convenient and digital way of exchanging money. So hence why it would be interesting to see a comparison. Perhaps the digital euro is a conscious effort to keep up with the innovation seen in China?
Are ECB going to then also assess what vendors are suitable or not? Eg porn sites?
That's a good question. I'd say that a CDBC account should be available to anyone (just as electricity is). Perhaps only to be made unavailable to those convicted of e.g. (financial) crime.
I didn't get to ask the question at the time. But, might send them a message about it for my upcoming video on the main channel.
@@MoneyMacroTalks another aspect could be how it impacts pseudo-banks like Paypal and Payoneer. Permanent bans of people do happen, especially those who make otherwise legitimate sexual content (since that's the context here), presumably because of the heightened risk of chargebacks, and then leaving them unable to use any services that only allow payouts to Paypal/Payoneer like Patreon, and Grailed, no matter whether their use of those other platforms is legitimate or not since the entire Paypal or Payoneer account is permanently gone.
@@MoneyMacroTalksActually I would take it farther and allow even criminals to use it. You can tier the wallet system so that there is a base wallet with fund/transaction limits that anyone, even those with a criminal record, should as a right be able to access. Fund use would not be restricted for these base wallets, whether for porn or whatever. There wouldn’t be much in the way of systemically meaningful criminal activity that can be facilitated using such a wallet. That’s the way petty cash amounts work. It’s enough to buy groceries, gas, etc. It’s important to preserve the principle of universal access to some degree.
Hey Joeri, can you do a video on MMT and the Eurozone?
not having the code be open-source would be a true crime!! if it’s a real public solution, it should be open to the public!!
Anyone else still waiting on a podcast version?
Yes... Sorry. I need to still sort out this process. Have been too busy just getting the videos done
So she says that the Central Bank does not have the data. Ok fair. But then the digital Euro card was created by a local bank so that local bank has the data, which can be accessed by the authorities if needed so it's still less private than a cash transaction. That part was quite a word salad, sorry
FIRST
Well done!!!
@@MoneyMacroTalkssecond
@@BrownDuskythird :)
I thought she was German because of "ääh"
She still does not answer the question: why not keep paying digitally through our banks as we do now? Imo she can't give an acceptable reason bc insuring a public currency is not the answer. I get wanting to go digital, but we really don't need the ecb for that. The system works well through private banks. So what happens the day the ecb says no more cash?
There is no need to "balance" privacy vs fighting "terroism and money laundering".
First of all the actions should be prevented before they are trying to intigrate with the finantial system. So its a secondary problem anyways... if you fix the primary problem it wouldnt matter.
Secondly the solution is to not centralize the monitoring. The only reason we need privacy is because we are being monitored by big centralized entities that can take power.
If there were independent groups that monitored on a town to town basis. Or say monitored groups of 50,000 people. Each group monitored by a team that each DIDNT report to some higher centralization.
Then we wouldnt need to "balance" privacy vs "fighting bad actors".
Bad actors would be monitored AND we would have privacy against top down control.
Cash = Freedom. Digital money is DEVIL. We must protect our Freedom with our lifes.
37:25 I think she mixed up credit and debit card?
I am surprised you didn't hard question like privacy and control of data .
we do talk about this around 47:01
@@MoneyMacroTalks ok thanks for highlighting it 😄
I can imagine how it develops. Everything will work as long as you are a good citizen. Incorporate social scoring and you will have society under control.
Two questions about this:
1. Isn't this also perfectly possible with the current system? Banks already give bank account access to governments?
2. Is there any evidence that policymakers want this? (honest question, I couldn't find any).
Explanation has a big flaw. In bank I have an account in Euro. Is it not digital? It is digital. I can pay using my bank card in Euro or my national currency. The terminal frequently asks in which currency I want to pay. So there is already digital Euro valid worldwide. I can also transfer money to other people via my phone. There
are methods. So something is obscure here .
The digital money from your bank is owned by the bank. If it goes bankrupt, your money is gone. The digital Euro is owned by the ECB. This money will never be lost. Also access to it does not depend on arbitrary private bank rules
@@Neomadra well, so the money on ECB account will depend on political decisions, for instance, in future, as the present trends will continue, “politically incorrect “ persons will have their money blocked. Further, the bank will probably have it easier to add an arbitrary amount of money by simply add some numbers,
I personally think a digital centralized currency be it from any country would be a disaster for personal privacy. (Crypto hater btw).
I understand the argument in general compared to cash. When it comes to privacy, cash is difficult to beat. Although, I wonder if e.g. a digital Euro is offered on pre-paid cards that you can buy in a shop (or encrypted cards on your phone)? That way I think it would be equivalent to cash when it comes to privacy.
When it comes to a comparison to digital money offered by private banks. I don't really understand the argument. I know from people that work in the banking industry that the government can already get all your transaction details (if they have a reason like e.g. tax avoidance suspicion). So, I don't really see how a CBDC managed at these same private banks is any different.
Happy to hear what I am missing.
*Promosm* 🌹
This is a dangerous step towards total control.
Nobody needs a Digital Euro. We have Bitcoin worldwide, which brings currency Stability
The purchasing power of the digital euro will erode at the same pace as the physical euro. Luckily there is Bitcoin.
Omg she doesn’t get the freaking question … what’s the point on the digital one.. jesus
Have you watch the video ? They talk about it for 1 hour wth.
To boil it down - currently, bank accounts are held with private banks and the digital money in those are issued by the private bank - the ECB plans to make a public version using a digital currency and a public bank account which is capped at 30,000 euros.
Well if that's how we feel cool I'm un-subbed from here too, I'm not going to leave comment to be harassed by weirdos with an agenda unabated. TH-camrs unwillingness to police their own channels comments sections is disgusting and disgraceful. The lack of enforcement is a joke but if any of you take personal insult to a remark made oh it's insta ban time, why deal with the problem when we can ignore it or shut the person up pointing out. Sure there is definitely a lack of social skill that play into this that people in "media" tend to have but but this stuff is just autism on steroids and it is unbearable. So many TH-cam channels have mothballed over this it is unreal.
After 10 minutes I was still not interested at all and stopped watching.
Too bad we didnt get an explanation on how the offline settlement will happen from a technical perspective and how they plan to react to the inevidble money dupes.
@thespiffingbrit is coming to exploit your systems
yeah that part hasn't been fully developed yet.