According to CoinDesk, a digital euro issued by the European Central Bank (ECB) could help end economic crises and deregulate banks, according to former Bank of Spain Governor Miguel Fernández Ordóñez. Speaking at a public hearing hosted by the European Parliament's Committee on Economic and Monetary Affairs, Ordóñez highlighted the stability of a central bank digital currency (CBDC) compared to bank deposits, which he described as promises to return money rather than actual money.
However, CBDCs have raised concerns about their potential to destabilize the banking sector by encouraging customers to withdraw deposits and convert them into the digital currency. To address this risk, European Union plans for a digital euro propose individual holding limits. These plans have also faced criticism over privacy concerns. Ordóñez argued that a digital euro could help deregulate banking activities and improve competition, as it wouldn't require deposit insurance or prudential requirements. He also suggested that a CBDC could allow the ECB to implement direct monetary policy without worrying about the impact on banking stability and contribute to a real European monetary union.