European Central Bank (ECB) official Piero Cipollone outlined the benefits of the digital euro, stressing how it would strengthen Europe’s financial sovereignty and resilience.
Speaking at a meeting of the Committee on Economic and Monetary Affairs, Cipollone stressed the “tangible benefits” of the digital euro for all stakeholders.
“It would enable Europe to independently develop and manage digital payment solutions,” he stressed.
The digital euro will represent central bank money in digital format (CBDC), offering an efficient and inclusive payment solution. Cipollone said the CBDC project, which began in 2021, is in the “middle of the preparatory phase.” He suggested that the project’s preparation will still take about a year.
This is in line with ECB President Christine Lagarde ‘s prediction to launch the CBDC before the end of her term in 2027, and she further stressed that it should be “ready for the future.” The project focuses on developing a methodology for determining the maximum limit of digital euro holdings per person, Cipollone added.
“The possession limit is important to ensure financial stability and prevent large-scale transfers from bank deposits to the digital euro, especially during crises.” In addition, the bank is also working to finalize a set of rules for the digital euro, which would provide “a clear set of rules and standards to ensure a consistent user experience across the eurozone.”
In addition to this, the ECB is also in the process of selecting potential vendors to develop the CBDC infrastructure. In addition, the project is also undergoing rigorous technical testing to verify privacy and offline functionality.
Digital euro benefits consumers, merchants and banks
“Consumers could use the digital euro for all payments, everywhere in the eurozone, including when shopping online. In addition, making or receiving payments with the digital euro would be free and available to everyone in the eurozone. It would also ensure user privacy and data protection, “Cipollone said.
For merchants , a digital form of cash issued by the central bank would reduce the costs associated with international card systems.
“The digital euro would include safeguards for merchants by reducing the fees they pay banks to process payments,” he said. As for banks, Cipollone noted that the digital euro would open up a new source of revenue. In addition, banks would be responsible for distributing CBDCs, thus acting as a point of contact for users.
