The ECB should give e-money issuers access to central bank reserves, Monerium said.
E-money issuer Monerium, supported by Consensys, believes the path to the digital euro is easier than the European Central Bank thinks
The fintech firm is focused on bridging fiat and blockchains by issuing programmable digital cash and released a response to the ECB’s recent public consultation on the digital euro on October 13th .
In the summer of 2019, Monerium was the first company worldwide to receive a license from the Icelandic regulatory authorities. This license is part of a new European legal framework for e-money services throughout the European Economic Area . It supplied Fiat payment services using the Ethereum block chain and later joined with the block chain protocol Algorand together .
In response to the ECB, Monerium argues that Europe only needs to acknowledge that it already has „a proven form of the digital euro“
In 2000 the European Commission described e-money as a “ digital alternative to cash “ and issued a directive. In this e-money was defined as “ technically neutral “ and as „electronic substitute for coins and banknotes“. Given this framework, Monerium now claims:
„In order to give e-money a status that is comparable to physical cash, the ECB only needs to grant the e-money issuers access to the reserves of the ECB.“
The inclusion of existing e-money issuers is better than the direct issue of a digital currency by the ECB to households and non-financial companies, according to Monerium. Direct issuance would mean a radical overhaul of the existing system in which the central bank primarily interacts with regulated financial institutions such as commercial banks.
Monerium backs up its claim with a report by two economists from the International Monetary Fund. These stated that non-bank providers could issue digital money with the support of the central bank. This could create a synthetic digital central bank currency (sCBDC).
According to Monerium, the existing European e-money framework is already compatible with the IMF’s key criteria for a stable digital currency. The transition from e-money to an sCBDC, as described by the IMF, would require the central bank to grant e-money issuers access to the reserves of the ECB:
„Such access would provide ‚a level playing field between e-money institutions and credit institutions‘, as the e-money directive also provides.“
The ECB has meanwhile made it clear that it wants to make a decision around mid-2021 on whether to introduce a digital euro.
An ECB report from October 2020 explained scenarios for and requirements for a future digital euro. The decisive factor here is that the central bank wants to achieve „strategic autonomy“ for the euro zone with a CBDC. She said that stablecoins from private and foreign actors „threaten to undermine financial stability and monetary sovereignty in the euro zone“.