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As the ECB celebrates its 25th anniversary today, where do things stand with the digital euro project that you are responsible for?
We are studying the design of the digital euro, its distribution and its impact on the financial sector. There are around 50 people in the team working on this project. We are in regular contact with the European Commission which is due to present a legislative proposal in June. This will provide the regulatory framework for the digital euro. Then in October the Governing Council will decide whether to launch a preparation phase to develop and test the digital euro. This phase could last two or three years. If the Governing Council and the European legislators – Member States and Members of the European Parliament – agree, we could launch the digital euro in three or four years.
Why does the euro area need a central bank digital currency?
To safeguard financial stability, we need to keep central bank money at the heart of the financial system. And we want to offer citizens a risk-free European digital means of payment that they can use free of charge anywhere in the euro area, in shops, online or for payments between individuals. Such a solution doesn’t exist at the moment. The digital euro will also provide a platform for European financial intermediaries to offer innovative payment services across the entire euro area. At present, services developed in one European country are often not available in others. And the European card payments market is dominated by two non-European companies whose cards are not accepted everywhere. Can you imagine a similar situation in the United States? And this situation would be exacerbated by the growth of big techs, which don’t hesitate to use their customers’ personal data to make money.
Some in the political world or from consumer associations are also worried about how the ECB could use the data collected via the digital euro.
The European Central Bank will not have access to personal data.
As for the financial intermediaries that will distribute the digital euro, a balance will need to be found between ensuring data confidentiality and combating money laundering and terrorist financing.
This balance will be determined by the legislator. In current discussions, some want to prioritise confidentiality, while others want to prioritise the fight against illegal activities.
What can we expect from the digital euro?
The simplicity of a payment instrument that is easy to use, available across the entire euro area and which will strengthen the use of our currency. Increased competition in the payments market and innovation based on this financial “raw material” that we will make available to European financial intermediaries. And greater monetary sovereignty.
In concrete terms, what will people be able to do with their digital euro account?
The ECB will ensure that all users benefit from a basic service that enables payments between individuals, retailers and public authorities. Europeans will, for example, be able to use it to pay online or in shops, to send money to their loved ones or to pay their taxes. And banks will be able to offer additional features such as recurring payments, payments based on usage or access to other financial services.