On Tuesday 8 April, Piero Cipollone, a member of the ECB’s Executive Board, set out a number of arguments in favour of introducing the digital euro, the main one being to “strengthen the strategic autonomy” of the euro area in a European payments market that is becoming increasingly dematerialised and marked by the growing role of non-European service providers.
“Excessively relying on foreign providers undermines our resilience and compromises our monetary sovereignty. (...) Failing to act would not only expose us to significant risks, but also deprive us of a great opportunity”, said Mr Cipollone during a discussion with the European Parliament’s Committee on Economic and Monetary Affairs.
In particular, the central banker referred to the Trump administration’s announcement to build up a pool of stable cryptocurrencies (stablecoins). This decision could push private players to develop mass payment solutions based on these stablecoins (see EUROPE 13600/14).
In his view, the US initiatives could lead to “further losses of fees and data” for European players, as well as “euro deposits being moved to the United States and (...) a further strengthening of the role of the dollar in cross-border payments”. In response to a question from Giovanni Crosetto (ECR, Italian), Mr Cipollone even mentioned the risk of “monetary substitution”. He also pointed out to Damian Boeselager (Greens/EFA, German) that the ‘MiCA’ regulation governing cryptocurrencies in the EU would not enable us to deal with this geostrategic challenge.
The ECB is therefore advocating the introduction of a digital euro that would act as an infrastructure for payments within the euro area. Mr Cipollone also compared the digital euro to a network of railways on which private payment solutions would be deployed. Because, in order to be accepted, the digital euro must be able to stimulate innovation, he said. One innovative solution would be to introduce conditional payments, which would only be made if a given service is provided.
Asked several times about the private sector’s fears, the central banker reiterated that maximum limits will be imposed on the holding of digital euros and that dedicated accounts will not earn interest in order to avoid the risk of bank deposit flight. He reiterated that the digital euro was in no way intended to put an end to cash payments.
See Mr Cipollone’s introductory speech: https://aeur.eu/f/gc6 (Original version in French by Mathieu Bion)