ECB Board Member: Digital Euro Should Complement Other Payment Methods

A digital euro should complement, not replace, other electronic payment methods or cash.

So said European Central Bank (ECB) Executive Board Member Fabio Panetta in a Monday (Jan. 23) speech to the European Parliament’s Committee on Economic and Monetary Affairs.

“Our priority for the digital euro project has always been clear: to preserve the role of central bank money in retail payments by offering an additional option for paying with public money, including where this is not possible today, for example in eCommerce,” Panetta said in the speech.

A digital euro is currently in the investigation phase, as it has been for a year. The investigation phase is to be completed in the fall, at which time the ECB Governing Council will decide whether to take a digital euro to the next phase, Panetta said.

As PYMNTS reported Jan. 2, as the investigation phase of the ECB’s digital euro project moves into technical considerations, the question of which path it will follow, compared to other central bank digital currencies (CBDCs), arises.

Will the digital euro look like China’s digital yuan? Or Nigeria’s eNaira?

Panetta said during the speech that digital payments are becoming increasingly popular in the euro area, with cash payments on the decline, but that people want the option to pay with public money.

A digital euro would make public money available in digital form, enabling payments everywhere in the euro zone in a way that’s free of charge, easily accessible and convenient, Panetta said.

While basic services would be free of charge, participating intermediaries could offer additional services from which people could choose, Panetta added.

“We believe supervised intermediaries, who are in direct contact with users, are best placed to identify use cases for conditional payments and any other advanced payment services,” Panetta said.

Addressing concerns that a digital euro could interfere with privacy, Panetta said the ECB proposes that it have no access to personal data, adding that it would be up to the European Parliament to decide how to balance privacy with other objectives like anti-money laundering (AML) policies.

The ECB also aims to give a digital euro offline functionality so that it has privacy and resilience like those of cash, Panetta said.

To enable use of a digital euro, the ECB is considering offering users the ability to use both supervised intermediaries — such as banking apps — as well as a new digital euro app, Panetta said.

“We have started work on the digital euro scheme rulebook to ensure a harmonized and user-friendly solution that works everywhere in the euro area,” Panetta said.