28 June 2023

EBF shares views on the digital euro, payment services and financial data access proposals

"It is crucial to ensure that the European Commission’s vision on digital finance helps enable a competitive ecosystem with a level playing field for all, unlocking new opportunities for users while upholding their safety in complex digital environments,” - Wim Mijs

The European Banking Federation (EBF) today shared its reaction to three major digital finance proposals put forward by the European Commission: a legal framework for a digital euro, the Financial Data Access framework and the Revision of EU rules on payment services.

“Today’s proposals touch upon central issues that will significantly affect the future of European financial services. It is crucial to ensure that the European Commission’s vision on digital finance helps enable a competitive ecosystem with a level playing field for all, unlocking new opportunities for users while upholding their safety in complex digital environments,” said EBF CEO, Wim Mijs.

He continued: “The proposal for the digital euro outlines the framework and the legal basis for the European Central Bank’s (ECB) plans for a retail Central Bank Digital Currency (CBDC). It is an essential part of the thorough, democratic and public debate that is necessary for a project of this magnitude, with a potential widespread impact on society and the economy. Alongside the main features of a digital euro, it is important to discuss the broader questions about its added value, how it can best respond to current and future challenges of the European payments market, and how it can be developed jointly with the market.

At the same time, the proposed framework for financial data access needs to be carefully considered in terms of the data in scope, so as to make sure that it responds to actual user and market needs. There are steps in the right direction when it comes to ensuring fair competition between market participants with a fair distribution of value and risk.

Finally, the revision of EU rules on payment services should provide a stable basis for the future development of a successful open banking framework, and rules that enable the fight against the increasing online scams and fraud”.

 

A legal framework for a digital euro

Today’s proposal lays the ground for the issuance of a retail digital euro. The legislation should find a balance between defining the key characteristics of the digital euro with leaving enough room for the market to develop its distribution. Certainty and clarity on the modalities regarding the holding limits as well as compensation for intermediaries are also needed.

A retail digital euro could – if properly designed – support the strategic autonomy of Europe and ensure a monetary anchor role of the euro. However, to complement the European payments landscape, it must provide a clear added value and be future-proof by design.

It should be understood as a “raw material” that would be issued by the Eurosystem, allowing the industry to develop solutions and fully deploy its innovative potential to deliver competitive payment solutions to the    European payments market through a true public-private partnership.

The design of a sustainable business model for the digital euro is vital. It is clear that the costs of building the infrastructure to enable the circulation of the digital euro, and its actual distribution cannot be borne by private actors alone. A harmonized framework of financial incentives should be set up where compensation mechanisms reflect the wider range of necessary actions to be taken by intermediaries.

In addition, to shield banks from the risk of deposit flight and to limit the negative impact on banks’ ability to finance the economy, it is important to set appropriate and firm limits in holdings and transactions....

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