Piero Cipollone: Digital euro: Stocktake and next steps
DIGITAL EURO
- DIGITAL EURO
Stocktake and next
stepsMeeting of Central Bank Governors
of the Center for Latin American
Monetary Studies (CEMLA)10 May 2024
Piero Cipollone
Member of the Executive Board of the ECBA European digital
payment solution
for any occasion
Rationale and key design choicesPayment landscape in Europe
Declining use of cash: the proportion of cash payments
fell from 72% to 59% (2019-2022); number of banknotes
in circulation decreased for the first time in 2023. - Fragmentation: there is no single European payment
solution for digital payments at the point of sale
anywhere in the euro area. - Dependence on international providers: 13 out of 20
euro area countries don?t have a national card scheme
and rely instead on international schemes for digital
payments. - These schemes account for 64% of all
electronically-initiated transactions with cards issued in
the euro area. - 3
Responding to evolving payment trends
Reflecting people?s increasing preference for digital payments
while still offering the option to pay with cashMaking people?s lives easier
Providing a public digital means of payment that people could
use free of charge for any digital payment in the euro areaStrengthening Europe?s resilience
Preserving Europe?s strategic autonomy while reducing our
dependence on non-European payment providers4
A digital form of cash
A digital euro would bring cash-like features to the digital world
Pan-European
reachFree
for basic useRespectful of
privacy5
Also available
offlineIssued by the
central bankAvailable for all occasions
National schemes
Cash
(card or account-based)
International
schemes (card orDigital euro
account-based)
Domestic
Person-to-person
payments*
Euro area
*
Euro area
Domestic
Domestic
Euro area
Euro area
Some
Point-of-sale
paymentsSome
**
**
E-commerce
paymentsSome
**
**
* Only proximity transactions, unless mailing cash
** Where acceptedDomestic
6
What would a digital
euro look like? - Key design choices
Your euro, your choice: diverse use cases, devices and
technology
Use casesConnectivity
Consumer
devicesConsumer
interfacesTechnologies
D?
Person-to-person
paymentOnline
Smartphone
Digital euro app
Internet
PSP
Point-of-sale
paymentE-commerce
Offline
Physical card
Web interface
8
PSP app
NFC
QR codes
Available online and offline
Cash
Cards
E-payment
solutionsDigital euro
Online
Offline9
Accessible and inclusive: no one left behind
Digital euro payments could also be made using a
physical card; cash can be used for digital euro
funding/defundingUsers would always have access to face-to-face
technical support and the option to easily switch
intermediariesIn addition to payment service providers, selected public
entities would also operate as intermediaries for users
that do not have a bank account10
Protecting your data and privacy
State-of-the-art technological solution
The Eurosystem would not be able to identify people based
on the payments they make ? it would only see a minimal set
of pseudonymised dataStrong data safeguards
The Eurosystem would implement safeguards, including
internal data segregation and auditing, to ensure high data
protection standardsFlexibility to ensure we are ready for the future
The Eurosystem would adopt additional, innovative privacyenhancing techniques when ready and tested for large
payments systems, fostering higher privacy standards for digital
euro users11
The international dimension
The international dimension is being factored into the
digital euro design from the startInitial focus on euro area users
Project resources are now focused on the timely delivery of
the first releases of a digital euro aimed at meeting the
needs of the euro area marketDraft legislation outlines framework for access
outside the euro area
? Temporary access for visitors
? Ad-hoc agreements for permanent access for noneuro area individuals and businesses
? Interoperability will be facilitated (at a later stage)12
Payment service
providers at the
forefront of distribution
Public-private cooperationDigital euro distribution would be carried out
exclusively by payment service providers (PSPs)PSPs would maintain customer relations
PSPs would benefit from digital euro open standards
14
Sufficient safeguards included in the digital euro?s design
Holding limits(Reverse) waterfall functionality
No remuneration of digital euro
holdingsHolding limits will be calibrated
A balance will be struck between the right to hold and pay with digital euro and the need to limit bank disintermediationIn-depth analysis is ongoing
Examine the implications for different
banks and liquidity scenarios, keeping
trends regarding banknotes in
circulation in mindEngage with a broad range of
stakeholders, including banks and
consumer groups15
Share information about the work
conducted to ensure
transparencyA digital euro: pan-European rail tracks for private solutions?
? Offering a platform for innovation for private providers to build
value-added services, such as conditional payments or the option of
splitting a bill
? Helping to avoid the proliferation of schemes that cover only
part of the euro area and duplicate costs, reducing their ability to
compete with international schemes
? Enabling private retail payment solutions to leverage the digital
euro infrastructure to provide new products in all euro area countries,
which could give users access to services that may not yet be
available in their domestic market? Reducing our dependence on other non-European players
16
Rulebook Development Group (RDG)
A digital euro rulebook would establish
common standards to:A digital euro scheme is being defined with
broad market involvement in order to
represent society at large:Ensure pan-European reach and a
harmonised payment experienceIntermediaries
Give market participants the freedom to
develop innovative solutionsRetailers
ConsumersEnable domestic instant payment solutions
to also achieve euro area reach17
Project timeline
Next stepsPreparation phase
Investigation phase
October 2021 ? October
2023Concept definition,
technical exploration and
design proposalNovember 2023 ? October 2025
Main expected next steps:
?
Finalise the scheme rulebook
?
Select service providers
?
Learn through experimenting
?
Dive deeper into technical aspects,
including conducting further research
into offline functions and developing a
testing and rollout plan for the future19
Next phase
From November 2025
Potential development and
rolloutThe project will evolve in parallel with the legislative
process to ensure readiness in the event a digital euro is
needed in the future
The ECB stands ready to:
? Provide technical support as required
? Make the appropriate design adjustments in line with
legislative deliberations
A decision on whether to issue a digital euro will only be
considered by the ECB?s Governing Council once the
legislation has been adopted20
Thank you
Additional supporting materials:
?Updated digital euro FAQ
?
Report: A stocktake on the digital euro
?
ECB opinion on the European Commission?s digital euro
legislative proposal?
Digital euro two-pager
?
Digital euro booklet
?
Digital euro LinkedIn page
Annex
Can pay free-of-charge
Revenues from sale of goods
Pays transaction feeConsumer pays for goods
Consumer
Has costs for providing a free service
Receives fee from merchant bankConsumer bank
Does not pay fee to EurosystemDoes not charge fees
Merchant
Limit: cannot charge more than for
comparable means of paymentMerchant bank pays a fee to
compensate consumer bank
for providing a free serviceScheme & Settlement
(Eurosystem)
23Receives fee from merchant
Pays fee to consumer bankMerchant acquirer
Does not pay fee to EurosystemDoes not charge fees