Sibos 2023: What will a digital euro look like?

Sibos 2023: What will a digital euro look like?

As the digital euro project comes to the end of its investigation phase, Ulrich Bindseil and Evelien Witlox from the European Central Bank provided the Sibos audience with an update on the progress made so far and what comes next.

While a final decision on issuing a digital euro has yet to be made, the ECB has been busy investigating options ahead of a potential launch, which would come in 2026 at the earliest.

Cash may still dominate payment volumes in Europe but a long trend of decline accelerated during the pandemic. Bindseil stressed that ”cash is our baby” and that the bank will work to ensure its continued existence.

However, with cash usage going down, there is a need to move to preserve central bank money. A digital euro is about preserving that system - not about revolutionising money.
Bindseil also sought to provide reassurance on a digital euro’s impact on financial stability.

“The excessive use of the digital euro as a form of investment and the associated risk of sudden large shifts from bank deposits to the digital euro should be avoided,” says an ECB report.

This means that there will be a limit on individual holdings while the distribution model will be based on supervised intermediaries.

Bindseil acknowledged that privacy is a major concern for many and said that the ECB has no interest in seeing or storing users’ private information.

Witlox noted that a digital euro would also have an offline component that would let payments be executed at close range without the need for third party validation - like cash.

As the ECB closes in on a decision on whether to move to the next stage of development, Willox said that a key consideration is whether a digital euro makes life easier for Europeans by providing a harmonised way to pay.

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