A recent paper on the digital euro from the Veblen Institute and Positive Money criticizes the current direction of the digital euro, saying it falls short of its potential. The paper, “a digital euro for the people”, argues that the European Central Bank (ECB) has “heeded to the bank lobby” and baked “their interests into the design of the digital euro” by imposing holding limits. Neither organization is a fan of commercial banks, so they are unhappy about the potential dependence on them as digital euro intermediaries. They would prefer to see a bigger role for the public sector and non profits, highlighting that the current wording does not rule this out.
Specifically, they note that the term ‘payment service provider’ (PSP) is legally a broad one, so we dug deeper. Under the Payment Services Directive 2, PSPs include:
In other words, even though it’s not currently proposed, technically you could download a digital euro wallet directly from the central bank or government. In reality, the holding limits would mean for most people, a wallet would need to link to a bank account. But those holding limits are likely to be relaxed as the digital euro becomes more mature.
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