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The EU must maintain “urgency” on the digital euro process to avoid falling behind global competitors and provide a common means of payment for all 20 eurozone members, Evelien Witlox, its project manager at the European Central Bank (ECB), told Euronews.

“If you look at the current landscape, we see a fragmentation of payment solutions, and the ones that come closest to the whole of Europe are not European,” Witlox said from its office in Frankfurt, Germany .

To date, there is no Pan-European digital payment solution, and 13 of the 20 eurozone countries do not have a national card system, relying instead on international providers such as Visa or Mastercard.

Given the high dependence on foreign players, the decreasing use of cash and the growing popularity of cryptocurrencies, the ECB launched a project in October 2021 to study the issuance of its own central bank digital currency (CBDC), called “digital currency”. euro”.

But before the ECB decides whether to launch the CBDC, European institutions must finalize the legal framework for such a project to become a reality – almost 17 months after the Commission’s proposal and following European elections , neither Parliament nor the Council have taken a decision. a position on the file.

“The discussions have progressed and I can only reiterate the urgency of maintaining sufficient pace in this process so that we can guarantee that the digital euro will be there when we really need it,” Witlox said of the legislative process underway in Brussels.

The ECB project manager stressed that while it is important to take the time to carefully prepare the digital euro, it is also important to act quickly enough, especially as other global players such as the UK and China are also exploring the same possibility.

“We are still at the forefront of the development (of a CBDC),” Witlox argued, adding that “it would indeed be a shame if we lost this opportunity to shape what we believe a CBDC to look like. detail should look like.

As for when Europe might see a digital euro, there is no concrete deadline at this stage, as the ECB will depend on the progress of the legislative process in Brussels.

Who is for and against the proposal?

The digital euro was proposed in 2021 to serve as an alternative payment method for consumers and businesses – but since then its design and added value have sparked concern and skepticism among some stakeholders.

While consumer organizations are primarily interested in financial inclusion and privacy, European banks are wary of the potential impact on bank deposits as well as the costs and infrastructure required to launch such a project in the Eurozone.

The Frankfurt-based institution has already emphasized that the digital euro would not be a savings instrument for large sums of money. This means that it will not be remunerated – deposits in digital euros will not earn interest – and will be subject to a holding limit yet to be determined.

“Whatever holding limit is ultimately agreed, it will strike the right balance between citizens’ freedom to hold central bank money and ensuring financial stability,” Witlox said.

The ECB project manager recalled that banks – and non-banks – will be key players in the deployment of the digital euro.

“Merchants will pay competitive fees to their banks to accept digital payments in euros, ensuring that ATMs are also fairly compensated for their work.” As with euro notes, the ECB will absorb some costs so that citizens can use them for free.

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As for privacy concerns, in the online version of the digital euro everything will go through intermediaries – banks or other payment service providers – and these will have to go through the same checks as for any other transaction, including anti-fraud and anti-fraud controls. money laundering.

However, in the offline version, transactions do not go through a network, which guarantees a higher level of confidentiality and comes closer to the advantages of cash, explained the ECB project director.

“There will be a separate holding limit for the offline version to protect it from misuse and in compliance with anti-money laundering and anti-terrorism financing regulations,” Witlox said.

The bill also includes certain provisions to ensure financial inclusion for all users of the digital euro, including a physical card, an offline version and an institution to top up the card.

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“In Italy, for example, one could imagine that these institutions would be the post offices, which anyone could turn to if they need face-to-face assistance in opening a digital euro account or start using it,” concluded Witlox.