A digital euro beyond impulse – think twice, act once
With the launch of an official digital euro, the ECB will enter into the uncharted territory of payment systems and bank accounts. This raises fundamental questions about the role of a central bank and the possible impact on the private provision of credit. It’s not out of the realm of possibility that retail client accounts with the ECB could become trigger for a new crisis. Before embarking on this ambitious endeavour, the ECB needs to stop and think twice.
The concept of central bank digital currencies (CBDCs) has emerged as one of the possible building blocks of the future payments ecosystem and central banks around the world are exploring what role they should play. The ECB has conducted thorough research over the past two years and is now ready to present the conclusions of its investigative phase of a retail digital euro.
As a retail CBDC, the digital euro is intended to serve different objectives, including as a new means of retail payment, as well as serving as a monetary anchor for the payments system, and increasing financial inclusion. Additionally, a digital euro – depending on its specific design features – has the potential to deliver benefits for end users (e.g. individuals, merchants and businesses) in terms of costs, settlement, privacy, and innovation. However, this combination of objectives and benefits comes with a set of complexities and risks, all of which require thorough consideration and a careful design.
Set up in April 2023 to examine how the digital euro could contribute to the future of payments and the role it should play in it, a dedicated CEPS Round Table brought together a balanced working group of market operators and infrastructure providers, central bank representatives, regulators, and academics to exchange views in several high-level discussions.
The report, ‘A digital euro beyond impulse – think twice, act once’, explores how the digital euro could contribute to the objectives being pursued with the project and analyses the main challenges that will need to be addressed for it to succeed. The report puts forward recommendations on what is necessary to be done prior to making the final decision over whether to issue a digital euro, as well as the approach to be followed once such a decision has been made.
10:00 – 10:30 Registration
10:30 – 10:45 Opening remarks
- Jose Antonio Alvarez, Chair of the Round Table; Vice Chairman, Santander
10:45 – 11:05 First reaction
- Miki Kuusinen, Adviser, Payment Systems Department, Bank of Finland
- Bruno Monteil, Digital Currency Expert, Banque de France
11:00 – 13:00 Panel discussion
- Michiel Hoogeveen, MEP
- Teresa Mesquita, Chief Product Officer, SIBS
- Peter Bofinger, Professor of International and Monetary Economics, University of Würzbürg
Moderated by Karel Lannoo, CEO of CEPS; General Manager of ECMI
12:00 – Lunch