The European Central Bank (ECB) has called for the implementation of a digital euro as a way to boost Europe’s financial sovereignty and resilience, said Executive Board member Piero Cipollone during a speech at the Committee on Economic and Monetary Affairs of the European Parliament.
On the occasion, Cipollone highlighted the benefits that the digital version of the euro could bring, particularly in the payments sector. “Europe could independently develop and manage efficient and inclusive digital payment solutions,” he stressed.
The digital euro represents the European Central Bank’s currency in digital format (a form known as CBDC, i.e. Central Bank Digital Currency).
Benefits for consumers, banks and merchants
Making or receiving payments with digital euros would be free and accessible to anyone in Europe. According to Cipollone, this payment method could also guarantee greater data protection and privacy for the user.
Consumers, specifically, would be able to use the digital euro for all types of payments in the European region, including online purchases.
For merchants, this innovation would reduce the costs involved in international transactions by limiting the fees they pay to banks to process payments.
Finally, Cipollone pointed out that banks would have a new source of revenue. Additionally, they would be responsible for distributing the digital currency, thus serving as a point of contact for users.
In preparation phase
According to Cipollone, the digital euro project, which began in 2021, is in the preparation phase and should take about another year. ECB President Christine Lagarde expects to launch the CBDC before the end of her term, which is expected to be in 2027.
One of the points the European Central Bank is working on is a methodology to determine the maximum holding limit of digital euros per person.
“These limits are important to ensure financial stability and prevent large-scale transfers of bank deposits into digital euros, especially in times of crisis,” said Cipollone.
In addition, the bank is also working to finalize the digital euro rulebook, which will establish norms and standards associated with the CBDC.
In parallel, the European Central Bank is selecting potential providers to develop a dedicated CBDC infrastructure . Finally, the project is undergoing rigorous technical testing to check privacy and offline functionality.
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