In a classic Eurocratic oratory display, Fabio Panetta – former Director of the Bank of Italy – has offered some explanation behind the progress made on the digital Euro central bank digital currency (CBDC).
His comments, however, were laced with what many observers will regard as a monotonously familiar tone – that of economic security.
He began by spelling out the European Central Bank’s (ECB) position on the state of money.
“In an increasingly digital economy, cash could become marginalised because it would no longer serve people’s payment needs,” he lamented.
What followed next was a little more unexpected, and could be the first signs of a well-documented strategy used by the European Central Bank being re-deployed.
Emergency Europe: How the ECB securitises economic narratives
In 2015, Professor Jonathan White, the Deputy Head of the European Institute at the London School of Economics published Emergency Europe – investigating the actions of the European Central Bank during the Eurozone crisis of 2008.
White identified that the European Central Bank had set about securitising the economic narrative of the crisis as a form of ’emergency politics’.
This meant the depiction of the eurozone crisis as an existential looming threat through careful rhetorical devices, as part of an effort to suspend the representative norms of European politics (the Parliament) – and vastly expand the technocratic powers of the European Central Bank.
What began as Barroso’s calls for “exceptional measures for exceptional times” soon became the onset of what President Jean Claude Trichet branded a ‘quantum leap of governance’.
The ECB narrative became ‘there is too much at stake for public opinion’ as economic planning regimes were enacted by unelected technocrats insulated from representative political input – necessary ‘to reassure markets’.
After that came the ECB interventions that saw Italy’s President Berlusconi removed from office and replaced with an unelected transitional budgetary regime, and huge pressure cast down on the Greek Prime Minister Papandreou after his decision to put the technocratic ‘rescue package’ to public referendum.
The same securitised language even permeated beyond the Eurozone, being used as evidence in support of the Conservative-Liberal Democrat Coalition’s 2010 ‘Emergency Budget’ – which deployed securitised language to justify austerity measures targeting Welfare funding.
Speaking to Coin Rivet, Professor White, explained the securitisation of the digital Euro narrative by Fabio Panetta.
“Justifying policies by reference to security is part of a familiar pattern for the ECB,” he explained.
“Technocratic institutions can struggle to legitimise their actions, especially when they’re unpopular: one way around this is to play up the threats that the policies are meant to ward off. Much of European integration has been framed in this way.”
European payments at risk
The crux of Panetta’s security argument stems from an apparent concern that international payment mechanisms are largely controlled by entities outside of the European Union, and a sudden spontaneous need to protect the sovereignty of European payments.
“Non-European payment providers already handle around 70% of European card payment transactions and if the footprint of these providers continues to grow, it would raise serious questions for Europe’s autonomy in payments,” argued Panetta.
“Use in cross-border settings could be curtailed in the future as it depends on the continued willingness of the international card schemes to provide such services.
“In parallel, big tech companies have entered the world of financial services… the functioning of global financial markets could be altered and traditional payment services could be crowded out”.
Given the focus on CBDCs, it’s apparent that the ECB executive is making reference to cryptocurrencies here – especially as networks such as Bitcoin’s SHA256 is largely mined outside of the EU – and ECB President Lagarde’s speeches in the past have made it crystal clear that the bank is far from happy about such lack of control.
“The presence of a digital euro could reduce the risk that the functioning of – and competition in – European payments could be altered by the dominance of digital means of payment managed by foreign-based entities and big techs with scale and information advantage,” he added.
With the Digital Euro anticipated to have an operational prototype by the end of 2023, these discussions now are key for establishing the narrative and arguments around the deployment of the centrally-administered stablecoin.
No doubt the depiction of foreign and big tech economic security threats, intertwined with the Europhilic allure of currency sovereignty, will eventually form the basis of the speeches that we will hear about cryptocurrency and digital asset regulation.
But, perhaps more importantly, these will be the same arguments and speeches used to cement the adoption of the Eurozone in the resilient edges of the Union – Sweden, the Czech Republic, Hungary – which have long avoided complete surrender of monetary policy to Frankfurt, but will invariably assimilated by an inflation free transparent CBDC.
Read more: ECB warns of crypto volatility.