On Monday 4 September, Fabio Panetta, member of the Executive Board of the European Central Bank (ECB) and Chairman of the Eurosystem’s outgoing Digital Euro Working Group (see EUROPE 13239/18), presented a progress report on the Digital Euro project to members of the European Parliament’s Committee on Economic and Monetary Affairs (ECON).
The hearing took place after the European Commission adopted two proposals in June: one to provide legal tender for the euro in its physical form, the other for a digital euro (see EUROPE 13211/11).
Mr Panetta indicated that the ECB was preparing an opinion on each of the two texts. He also stressed the need for democratic debate surrounding the project.
He told Georgios Kyrtsos (Renew Europe, Greek) that the ECB wanted to convince as many people as possible of the need for a digital euro, not just the Germans. He believes that broad support is needed, particularly at the political level.
Reasons for scepticism
A number of MEPs once again expressed scepticism about the added value of the digital euro project.
Michiel Hoogeveen (ECR, Dutch), as rapporteur on the directive on instant payments, felt that instant payments already met many demands: speed, less dependence on American card payment systems, at no additional cost.
The MEP acknowledges that one of the advantages of a potential digital euro is not covered by instant payments: offline payment, but he believes that the Chipknip system in the Netherlands, which offered this functionality, has disappeared for lack of demand.
For Mr Panetta, the surveys carried out show that the commercial sector is keen to have an additional means of payment. In particular, he believes that this would provide an alternative for small merchants where existing payment providers charge too much.
Furthermore, Mr Panetta told Evelyn Regner (S&D, Austrian) that if the digital euro were not launched, the situation would not lead to a status quo, but to a situation where a non-European player could enter the market with its own central bank digital currency solution and would not offer the guarantees of privacy, security and safeguards for financial stability in Europe that a digital euro would.
Fabio Panetta also felt that freezing the digital euro project was not a satisfactory response. Indeed, if the digital currency were to be launched in response to such a third-party player, the project would require years of preparation.
On the other hand, Mr Panetta would welcome cooperation between Europeans and other countries developing their own central bank digital currency solutions with the aim of making these currencies interoperable.
Finally, in response to the concerns of voters reported by Markus Ferber (EPP, German), Fabio Panetta again stressed that the proposal for a digital euro was not intended to replace euro notes and coins (see EUROPE 13168/23). He did, however, mention two trends that are marking the context of work on the digital euro: the declining use of cash and the digitisation of the economy.
Costs
Fabio Panetta reiterated that the digital euro should not entail any cost for the end user. A system of interchange fees would enable the costs to be shared between the banks issuing the digital wallet for the payer and for the payee, similar to the system in place today for means of payment, with oversight to ensure that these charges are not too high.
However, the banks could be compensated and will be able to offer additional paying services based on the digital euro.
Limits
Finally, Mr Panetta pointed out that the proposal was to cap the amount of digital euros that an individual user could hold in his or her electronic wallet, in order to avoid disintermediation and liquidity problems, but felt that the merits of a limit on transaction flows would be part of the discussions. (Original version in French by Émilie Vanderhulst)