Revolutionizing Payments: European Commission's Vision for a Digital Euro

• Financial

In the picturesque city of Pamplona, famed for its bull runs and ancient architecture, a different kind of future was being discussed. On Aug. 25, Deputy Governor of the Bank of Spain, Margarita Delgado, stood before an audience of university students and various stakeholders, delving into the European Commission’s proposal for a digital euro.

Breaking Barriers and Boosting Business

For years, the European Union has faced hurdles like cross-border payment barriers, substantial costs for businesses relying on private payment service providers (PSPs), and a noticeable scarcity of these PSPs within Europe.

The digital euro, as Delgado highlighted, has the potential to address these concerns and facilitate seamless financial transactions across member states. Moreover, with the global trend leaning towards central bank digital currencies and the proliferation of stablecoins, the urgency to introduce a digital euro becomes even more palpable.

Without it, the gap left by the lack of PSPs in Europe could widen. However, Delgado views the situation with an optimistic lens: “We believe there is enough space for a digital euro and private payment solutions to co-exist.

[…] In fact, our expectation is that the digital euro enables the development of new pan-European payment and financial services by the private sector, making it easier to compete with non-European solutions”.

Continuamos con la tradicional mesa redonda sobre política monetaria con Margarita Delgado, subgobernadora del Banco de España, @burkhardbalz, miembro del Comité Ejecutivo del BundesBank, Ángel Nigorra, director general de Bizum España, y @PabloZalba, comisario de los CEV.

pic.twitter.com/Q05tFeaK17 — Equipo Europa (@Equipo_Europa) August 25, 2023

The Roadmap for the Digital Euro

Before the European Central Bank (ECB) goes global with the digital euro, the institution is keen on a successful implementation within the eurozone.

Delgado points out that once the digital euro gains traction in retail usage outside the eurozone, it will open doors for private PSPs, acting as bridges to facilitate transactions. The ECB, while championing the cause of the digital euro, also has some prerequisites for its effective implementation.

Stressing the importance of inclusivity, Delgado shared: “It [the ECB Eurosystem] has also called on regulators to act in order to require payment service providers to make the digital euro available to the broad population”.

Adding another layer to the proposition, the ECB also desires PSPs to introduce a physical payment card linked to the digital euro, catering to the diverse transaction preferences of Europe's vast populace.