European CBDC reservations about a possible digital euro, some of which have strayed into the realm of conspiracy theories, show that there is no compelling need for such a digital currency in the European Union, Bank of Spain governor Pablo Hernández de Cos said in a speech on Monday.
Although the European Central Bank's digital euro project is important, the European and Spanish payment systems are "very efficient", which is why central bankers are "proceeding cautiously with our analysis", he said.
The ECB's central bank digital currency (CBDC) project, which is exploring the issuance of a digital version of the euro for retail payments, began quickly but slowed with legislative proposals earlier this year, and central bankers face political opposition. Criticism included legitimate privacy concerns and escalated into conspiracy theories about a digital euro playing a role in a plan to expand state control.
A CBDC should be designed to mitigate any risk to financial stability and monetary policy, Hernández de Cos said. He said:
"I am fully aware that, in the current state, this initiative raises many questions, both for society in general and for the financial sector. In these circumstances, the issuance of a digital euro is not taken for granted as an imperative."
That does not mean work on a digital euro should stop, the governor said. In November, the project moved into a "preparation phase", during which the ECB will finalise a rulebook and select providers to develop a platform for testing. Hernández de Cos continued:
"I believe that it is our responsibility - not only of the central bank, but also of the financial sector - to ensure that a service that is essential for the well-being of society, such as the payment system, is not a threat. Therefore, whatever the final decision, I believe that all the efforts of the Eurosystem, past and future, are fully justified."