On Tuesday 24 March, MEPs on the European Parliament’s Committee on Economic and Monetary Affairs (ECON) questioned Piero Cipollone, member of the Executive Board of the European Central Bank (ECB), on a series of technical and political issues relating to the digital euro project.
On the right of the Chamber, a number of MEPs have expressed varying degrees of concern about the potential effects of this future digital currency on financial stability, banking disintermediation and the traceability of transactions.
The European Parliament rapporteur on the dossier, Fernando Navarrete Rojas (EPP, Spanish), insisted on the issue of financial stability. Referring to a recent ECB technical note, he asked Mr Cipollone about the impact of the system in extreme financial stress scenarios. In response, Mr Cipollone put the risks into perspective, referring to an “extreme scenario” and stressing that “only 13 banks”, representing “less than 1% of euro area assets”, would be potentially affected.
A more critical MEP, Mireia Borrás Pabón (PfE, Spanish) described the digital euro project as “useless, risky and misguided”, saying it could weaken the banking system and pave the way for increased surveillance of citizens. In particular, Ms Borrás Pabón denounced a possible ability to “trace and influence payments”, rejecting “further public intervention”. “We call on Mr Navarrete of the People’s Party not to give in to pressure from his own party, from the ECB or from the left”, said Ms Borrás Pabón on behalf of the right-wing nationalist group Patriots for Europe.
Mr Cipollone rejected these allegations, assuring her that “the ECB will not see who is paying whom” and that the system would guarantee a level of confidentiality equivalent to that of cash for offline payments.
Payment charges. On the left of the Chamber, Nikos Papandreou (S&D, Greek) focused his speech on the proposed payment fees, which he felt were still too high, despite technological progress. The Socialist MEP called for a review of the compensation mechanisms, particularly in favour of small retailers. Mr Cipollone noted that the scheme could significantly reduce costs, with some small retailers able to “save as much as half” of their current costs.
“Some politicians take money from banks”. Fabio De Masi MEP (independent, German) also stressed the issue of costs for citizens, calling for the digital euro to be used to reduce them. “What are we doing to make payments cheaper for our citizens so that they voluntarily ask for the digital euro and do not feel that they are being forced to do so by making cash disappear?” wondered the former member of Parliament’s The Left group.
“I got elected not by banks, but by citizens. I know there’s some politicians who take money from banks, I don’t”, he declared, seeing the digital euro as a means of introducing more competition into payments and resetting the balance of power with banking and private players.
Interoperability. Questioned by Gilles Boyer (Renew Europe, French) on the interoperability of the payment system, i.e. the ability of the various means of payment to work together throughout Europe, Mr Cipollone stressed the need to develop common standards.
At present, payment systems are often organised at national level and are not always compatible with each other, and a large proportion of payments are based on non-European international networks. The ECB’s objective is therefore to create common technical rules to enable European banks and companies to operate easily throughout the single market, while strengthening European autonomy.
‘Co-badging’ of payment networks. On the issue of co-badging, raised by Damian Boeselager (Greens/EFA, German), i.e. integrating several payment systems on the same medium, such as a bank card or a digital application, the ECB is proposing to combine the national payment system with the digital euro infrastructure.
In practice, the user would not notice the difference: at the moment of payment, the system would automatically select the appropriate network. If the merchant accepts the national system, it will be used; if not, the payment will switch to the digital euro, which would work throughout the euro area.
“For the user, it’s completely neutral. You don’t even realize what rail is going to be used”, noted Mr Cipollone.
The central banker stressed to the ECON Committee the need for swift adoption of the legislative framework currently being studied by the European Parliament, which he said was essential if the technical choices were to be finalised and roll-out by 2029 was to be possible. (Original version in French by Bernard Denuit)