Why the ECB Thinks Banks Can’t Survive Without the Digital Euro

The European Central Bank (ECB), through Executive Board member Piero Cipollone and Supervisory Board Vice-Chair Frank Elderson, contends that the digital euro is a necessary strategic tool for European banks, not a threat. They highlight that European banks are losing ground due to heavy reliance on foreign card schemes, which process two-thirds of euro area card transactions, and the risk of deposit drain from stablecoins. Banks currently face a triple loss: losing fees to international card schemes, losing fees and data to big tech payment solutions, and risking fees, data, and stable retail deposits to stablecoins. The digital euro is designed to center banks in the distribution model, allowing them to manage accounts and retain customer data. The Eurosystem plans to eliminate scheme and processing fees, compensating banks for services. Co-badging would also allow European debit cards to pair with the digital euro for pan-European acceptance. The ECB estimates investment costs for banks to be relatively low compared to their IT budgets. A pilot exercise is planned for 2027, with potential issuance by 2029. The ECB also asserts the digital euro will not harm financial stability due to holding limits and the absence of interest on balances.

(Source：BeInCrypto)