18 October 2023
- Governing Council to start digital euro preparation phase following conclusion of two-year investigation phase on design and distribution of a digital euro
- Preparation phase will lay foundations for a potential digital euro, with work to include finalising rulebook and selecting providers to develop platform and infrastructure
- Preparation phase will pave way for potential future decision on issuing a digital euro
The Governing Council of the European Central Bank (ECB) decided today to move to the next phase of the digital euro project: the preparation phase.
This decision follows the completion of the investigation phase launched by the Eurosystem in October 2021 to explore possible design and distribution models for a digital euro. Based on the findings from this phase, detailed in a report published today, the ECB has designed a digital euro that would be widely accessible to citizens and businesses through distribution by supervised intermediaries, such as banks.
The design envisages the digital euro as a digital form of cash that could be used for all digital payments throughout the euro area. It would be widely accessible, free for basic use and available both online and offline. It would offer the highest level of privacy and allow users to settle payments instantly in central bank money. It could be used from person to person, at the point of sale, in e-commerce and in government transactions. No digital payment instrument offers all these features. The digital euro would fill that gap.
The next phase of the digital euro project – the preparation phase – will start on 1 November 2023 and will initially last two years. It will involve finalising the digital euro rulebook and selecting providers that could develop a digital euro platform and infrastructure. It will also include testing and experimentation to develop a digital euro that meets both the Eurosystem’s requirements and user needs, for example in terms of user experience, privacy, financial inclusion and environmental footprint. The ECB will continue to engage with the public and all stakeholders during this phase. After two years, the Governing Council will decide whether to move to the next stage of preparations, to pave the way for the possible future issuance and roll-out of a digital euro.
The launch of the preparation phase is not a decision on whether to issue a digital euro. That decision will only be considered by the Governing Council once the European Union’s legislative process has been completed. The ECB will take into account any adjustments to the design of the digital euro that may become necessary as a result of the legislative deliberations.
“We need to prepare our currency for the future,” said Christine Lagarde, President of the ECB. “We envisage a digital euro as a digital form of cash that can be used for all digital payments, free of charge, and that meets the highest privacy standards. It would coexist alongside physical cash, which will always be available, leaving no one behind.”
The digital euro would make data protection a priority. The Eurosystem would not be able to see users’ personal data or link payment information to individuals. The digital euro would also achieve a cash-like level of privacy for offline payments.
The digital euro would promote resilience, competition and innovation in the European payments sector. It would ensure that there is a pan-European payment solution for the euro area under European governance. It would rely on its own infrastructure, thereby strengthening resilience. And it would provide a platform on which European supervised intermediaries could build pan-European services for their customers, increasing efficiency, reducing costs and fostering innovation.
“As people increasingly choose to pay digitally, we should be ready to issue a digital euro alongside cash,” said Fabio Panetta, ECB Executive Board member and Chair of the High-Level Task Force on a digital euro. “A digital euro would increase the efficiency of European payments and contribute to Europe’s strategic autonomy.”
Digital euro distribution
Users could access digital euro services via their payment service provider’s proprietary app and online interface, or via a digital euro app provided by the Eurosystem. People without access to a bank account or digital devices would also be able to pay with digital euro, for example by using a card provided by a public body such as a post office. Users would also be able to exchange digital euro for cash or vice versa at cash machines.
The Eurosystem envisions a digital euro that would be free for basic use for individuals. A compensation model between intermediaries and merchants would ensure that there are incentives for intermediaries to distribute digital euro, as is the case for other electronic payment instruments, and that there are adequate safeguards against excessive service charges for merchants. The Eurosystem would bear its own costs, including those related to scheme management and settlement processing.
Transparency and close cooperation with stakeholders remain key pillars of the project. The Eurosystem has benefited greatly from feedback from European decision-makers, market participants and potential users, and will continue to engage actively with a wide range of stakeholders. We will also continue to cooperate closely with EU legislators.
Notes
- Proposal for a Regulation of the European Parliament and of the Council on the establishment of the digital euro, European Commission, COM(2023) 369 final, 28 June 2023; and Proposal for a Regulation of the European Parliament and of the Council on the provision of digital euro services by payment services providers incorporated in Member States whose currency is not the euro and amending Regulation (EU) 2021/1230 of the European Parliament and the Council, COM(2023) 368 final, 28 June 2023.
- The Eurosystem has established a digital euro scheme Rulebook Development Group to support the drafting of a single set of rules, standards, and procedures for the digital euro. The Group is composed of Eurosystem staff and market representatives who provide input from the financial industry, consumers and merchants.
Source – ECB
Statement by the Eurogroup on the decision of the ECB’s Governing Council to launch the next phase of the digital euro project
Brussels, 18 October 2023
The Eurogroup has been regularly engaging in a dialogue with the European Central Bank (ECB) and the European Commission regarding the digital euro. We issued a statement in January 2023 summarising the key political dimensions of a digital euro arising from our discussions, thereby supporting the work carried out by the Eurosystem and the Commission, in full respect of the institutional roles and mandates of all actors involved. We continued our regular exchanges on the political dimension of a digital euro throughout this year.
Last June, we welcomed the publication of the Commissions’ Single Currency Package which is now being discussed by the European Parliament and the Council of the European Union as co-legislators. Today, we reach another milestone as the Eurosystem has concluded its investigation phase. We welcome the decision of the ECB’s Governing Council to proceed to the next phase of the project during which the Eurosystem will further explore and test design aspects and functionalities of a digital euro. This preparation phase does not prejudge a future decision on the possible issuance of a digital euro, which would only come at a later stage and would necessarily depend on the EU legislative developments.
In parallel to the legislative deliberations by the EU co-legislators and the continued preparatory work within the Eurosystem, the Eurogroup will continue to play an active role in providing a complementary political strategic anchor to the future work.
Source – Eurogroup
EU-Abgeordneter Markus Ferber (EVP/CSU): Statement zum Digitalen Euro
Straßburg, 18. Oktober 2023
Heute hat die Europäische Zentralbank beschlossen, dass die Arbeiten am digitalen Euro im Rahmen einer Vorbereitungsphase fortgeführt werden sollen. Der Sprecher der EVP-Fraktion im Wirtschafts- und Währungsausschuss (ECON) im Europäischen Parlament, Markus Ferber, erklärte dazu:
„Beim digitalen Euro gibt es keinen Grund zur Eile. Es wäre die weisere Entscheidung gewesen, die Beratungen des europäischen Gesetzgebers abzuwarten, bevor die EZB die nächste Phase einläutet. Es gibt durchaus die Möglichkeit, dass der europäische Gesetzgeber bei der Rechtsgrundlage noch an zentralen Stellschrauben dreht – dann könnte die Vorbereitungsphase für den digitalen Euro schnell für die Katz gewesen sein.
Bisher hat die EZB den Mehrwert eines digitalen Euros noch nicht klar kommunizieren können. Die Vorbereitungsphase stellt eine Chance für die EZB dar, den digitalen Euro so anzupassen, dass er tatsächlich die Möglichkeiten einer digitalen Währung ausschöpft. Diese Gelegenheit sollte die EZB nutzen.“
ESBG: preparatory phase for the digital euro calls for a true public-private partnership between the ECB and banking sector
The ESBG appreciates today’s decision by the Governing Council of the European Central Bank (ECB) to move to the preparatory phase for the digital euro. ESBG underlines that the current collaboration between the ECB and the banking sector should further increase as only a true public-private partnership can be the cornerstone of a successful digital euro. The next phase will entail critical decisions across the ECB’s development, and the related legislative acts. Effective delegation of responsibility and utilisation of expertise between the public and private sectors should be diligently considered to ensure maximum value of the digital euro to European consumers and financial services.
Brussels, 18 October 2023 – The European Savings and Retail Banking Group (ESBG) acknowledges with keen interest the decision by the Governing Council of the European Central Bank (ECB) to move to the preparatory phase of the digital euro project.
The ESBG appreciates the involvement of the various stakeholders, notably the banking industry, during the investigation phase, and for the ECB’s continued dialogue with the European banking sector. It underlines that further discussions are required to tailor the possible digital euro to a product that is attractive to all stakeholders – notably consumers, merchants, and banks. Only a true public-private partnership can be the cornerstone of a successful digital euro, and therefore the ESBG is calling upon the ECB to further increase the collaboration with the banking sector during this new project phase.
With this collaboration in mind, the ESBG welcomes the decision’s adjoining report by the ECB and Eurosystem. The report presents the conclusions of the ECB’s investigative phase and envisions a digital euro accessible to all individuals and businesses through supervised intermediaries such as banks. The ESBG now looks forward to working with the ECB, to realise the design of the digital euro and fulfil the role of EU banks as trusted partners in ensuring universal access to the digital euro.
As the decision of the Governing Council of the ECB marks the end of the investigation phase, and kicks off the preparatory phase, Peter Simon, Managing Director of ESBG, is looking forward to increase the constructive discussions in the phase ahead. “A possible introduction of a digital euro is an important step that could impact some of the core activities of our members. We stand ready to contribute to the discussions and to ensure that the voices of the savings and retail banks in Europe are being heard.”
“At ESBG, we have been engaging in the development of a digital euro via various stakeholder groups of the European Central Bank (ECB) throughout the whole investigation phase ever since it was launched in 2021”, Sofia Lindh Possne, Head of Group Regulatory Affairs, Swedbank and Chairperson of the ESBG Task Force on Central Bank Digital Currencies, stresse. “A ground-breaking innovative project like the digital euro requires a prudent approach to maintain the financial stability of banks and to ensure a level playing field in the European payments market”.
ESBG members stand ready to contribute to the discussions in this new phase to ensure that the voices of the savings and retail banks in Europe are being heard.