Transcription
Hello, welcome to the program. My guest today is a leading voice on European reform and particularly on the need to integrate the EU's single market in order to make the block more competitive while the EU faces huge global challenges. And Enrico Letta was Prime Minister of Italy in 2013 and 2014 and leader of the Italian Democratic Party in 2021 to 23. Uh he is now the Dean of IE University in Madrid and Enrico Letta is the author of a much quoted high-level report on the future of the EU single market.
Our main focus today is going to be on a very important event, the future rollout of the digital euro. Our reporter Alex Laborde has this report. Since last summer, Nikola Giliou has been unable to use his bank card. He's one of the judges on the International Criminal Court who issued an arrest warrant for Israeli Prime Minister Benjamin Netanyahu. As a result, he was sanctioned by the United States, a major ally of Israel. Since then, the judge has been experiencing the consequences of European dependence in banking matters on a daily basis.
I was in a train station in the Netherlands a few weeks ago. There was a sign that said no cash. It had logos of payment methods, all Chinese or American. So, that means when you are a European citizen and a foreign country cuts off your payment options, you no longer have any way to pay. This shows that we absolutely must regain sovereignty because it is in fact a huge vulnerability. Today, it's happening to 11 ICC judges and prosecutors, but it could happen to many more people. It's a crippling situation that led this judge to take a close interest in the digital euro project being discussed in Brussels.
It's a form of electronic money issued directly by the European Central Bank and distributed by private banks. We do not have any generally pan-euro area payment solution. So, what a digital euro would do, it would create uh this uh payment infrastructure on which uh the private banks and our private payment solutions could build uh further. But the banking sector doesn't see it that way. Even though the plan includes a limit on holding digital euros, banks fear losing their customers' deposits to this public currency. Banks are obviously afraid of a loss of liquidity and above all, they fear that in the event of banking stress, all of a sudden bank savings will relocate to the European Central Bank.
A digital euro could restore banking sovereignty to the EU, but one question remains. Will it be enough to convince people given that one in 10 Europeans now holds cryptocurrencies independence of states such as Bitcoin? So, Enrico Letta, we saw in that report the idea of American payment payment providers is really key to this whole project, isn't it? I think the reportage was very good and very well done because the story of the judge is an incredible story and it's something that shows our dependency. So, sovereignty for us means integration. If we are only working at national level, this national level means sending gifts to the US, to China and sovereignty today is only at the European level of a true sovereignty. Otherwise, we keep our national sovereignty that is a fake sovereignty and this sovereignty will be only a gift to the others.
Let's explore some of the other points that were raised in that report. Banks being worried about losing their customers. Is there going to be competition basically between banks as we know them today and this single currency once it comes comes into use? I think the move from from the European Central Bank is a good one, but I know and I think there will be discussions and agreements among the different actors and also with the banking system. Otherwise, it would be it would be complicated, but I'm sure that these agreements will be found. It's absolutely fundamental to have integration of the banking system, financial markets scale up and at the same time this digital payment system, it is fundamental to raise European competitiveness and to give us the European sovereignty that is absolutely necessary today.
So, you're not too concerned about what that economist said in the report about that could be in a kind of bank stress situation, a run on deposits, that kind of very bleak scenario. That is that realistic? >> I think today the system has the tools to resist to a crisis. We are not in the situation of 8, 9 or 11. We are in situation which the European Union has tools and I'm sure that these tools can be used in case, I hope not, at a new crisis.
What do you think about perceptions among the public of a of a single currency? Of course, there's different issue whether the cash will still continue or not and to what extent, but first maybe on the point about cryptocurrencies which Alex mentioned in her report. We heard that one in 10 Europeans use cryptocurrency. So, de facto, there's already competition, is that to to a single currency? Yes, it is and it is necessary to trust the ECB on that. I think the ECB is our I would say unitary tool. It represents all the European and is absolutely fundamental to trust the ECB in the work ECB is doing to avoid that on these topics what we risk is to be once again totally dependent on what is happening in the US. If we are able to be more united and to be more modern in tackling these news, I think that could be a good news for Europe.
The ECB insists that cash will still be available for people who want to use it, but do you think in reality it will just be phased out a bit like the old telephone boxes, you know, that there's a few of them around, but nobody actually goes in there to to make phone calls anymore. I think we all know that in 10 years time cash will no longer exist or will be totally marginal. It is today marginal and it will be more marginal. I think it's also the way to avoid all the black economy that we have in part of Italy in part of Italy in part of other European countries. So, for me knowing what is how difficult it is to tackle black economy, I know the only way is to stop the use of cash.
But on the anonymity side of things, people are still concerned about that. I mean, I think a lot of people would want to still be anonymous at least for small payments which they can do with cash at the moment. Yes, but it is true also that there are all the possibility to be anonymous also with digital payments. So, it is a problem that we have to I would say to to deal with. But I think the future will be a cashless society. We'll end on that very interesting sentence. Thank you so much for being my guest, Enrico Letta, former Prime Minister of Italy and Dean of IE University in Madrid. Glad you could join us for this episode and we'll see you again soon on the program.