The proposed retail digital euro should be appropriately designed in collaboration with the private sector, create value for end-users, preserve financial stability and incentivise and enable private sector intermediaries to add solutions and services within the central bank digital currency (CBDC) ecosystem, according to a European Banking Federation (EBF) vision paper.
Vision on a Digital Euro Ecosystem sets out how the EBF envisages a retail digital euro operating “in the mix of new tools and solutions to meet evolving payment needs”, but also details the core principles for other elements in a digital money ecosystem, including a wholesale CBDC and bank-issued money tokens.
“Should the European authorities move forward with the project, it is most appropriate to issue a retail digital euro as raw material, allowing the industry to develop solutions and fully deploy its innovative potential to deliver [a] future-proof and competitive payment solution to the European market,” the EBF says.
“To make this a reality, a retail digital euro should be developed with strong market involvement, in a full and transparent public-private partnership to ensure that it:
- Creates value for end-customers and the economy for existing and new innovative use cases, without crowding out payment services provided by the private sector;
- Preserves financial stability and bank funding, thus maintaining European banks’ lending capacity to the economy;
- Foresees a robust business model so as to incentivise intermediaries to provide services and innovate based on the digital euro;
- Balances design choices to safeguard privacy and enable the fulfilment of compliance requirements (KYC, AML, CFT) while allowing intermediaries to process customers’ payment data based on customers’ consent to provide value-added services;
- Leaves ample room for the private sector to add on solutions and services to better serve customers.”
“The issuance of a retail digital euro would be a major evolution, with wide implications for all economic actors, including the ECB and the Eurosystem itself,” the EBF adds.
“The project goes well beyond the creation of a new tool for payments, and questions related to the impact on the macroeconomic, societal and financial sector levels should be a central part of the strategic, political and technical debates.”
The European Central Bank revealed its plans for a staggered rollout of a digital euro in a presentation published in March.