Roll out digital € considering peoples' concerns: EU Parliament to ECB

The Parliament specifically requested the ECB to assess how war and conflict can affect price stability.

The MEPs expressed uneasiness about the ‘historically and persistently’ high levels of inflation, arguing price increases hit those with lower incomes the hardest. They noted the ECB was wrong to believe inflation would only be transitory and economic forecasting models need to be improved to allow for better policymaking.

They decried the ‘significant subsidy’ to banks arising as an indirect result of ECB policies that led to large interest payments on bank deposits at the ECB, and asked for measures to mitigate this issue, a release from the European parliament said.

The MEPs demanded that the ECB should demonstrate the benefits of a digital euro before legislators, rather than the ECB governing council take the decision on its introduction. They insist that a digital euro must co-exist with physical cash, which “should remain widely available at all times”.

Financial stability concerns and potential changes in the structure of the financial sector resulting from the introduction of a digital euro must also be taken into account by the ECB, the MEPs noted.

For the first time, the MEPs asked the ECB to draft a Geopolitics Plan 2025-2030 to understand better the implications of war and conflict on price stability.

Parliament also wants the ECB to assess how climate change affects its ability to maintain price stability. The institution should use the available tools to ensure banks take financial and external risks, including climate and geopolitical risks, seriously, their resolution said.

Fibre2Fashion News Desk (DS)