Eventually launched in the euro zone, the digital euro will be available for retail payments, covering the day-to-day expenses of individuals and businesses. It comes against the backdrop of the development of similar projects, notably in Sweden, China and Cambodia. In France, banks are keeping a close eye on the development of this project, and are expressing certain reservations.
The digital euro project gathers pace in Europe
Work on the digital euro, a response to the development of crypto-currencies, is gathering pace. Last September, the representatives of France, Germany, Italy, Spain and the Netherlands on the Economic and Financial Committee met to sign a "non-paper" on the subject, according to Les Echos newspaper, which obtained a copy.
The document underlines the " essential role " played by the digital euro " in strengthening the European Union's strategic autonomy and fostering innovation in the financial sector, while preserving the role of central bank money as the anchor of our monetary system ".
The European Commission could put forward a legislative proposal in the 1st quarter of 2023, on which the Finance Ministers would vote at the end of the year. This would be followed by a test phase and a review of the launch of the digital euro project in 2026 or 2027.
French payments specialist Worldline has been chosen to take part in one of five tests to prepare for the creation of a digital euro. Paylib, a French interbank mobile payment platform, is also bidding to serve as the basis for the pan-European project.
Reserves issued by banks
The virtual currency project is of particular concern to banks, which point to significant risks for the European banking sector.
While on its website, the ECB points out that the digital euro will be " the equivalent of euro banknotes in dematerialized form " and will exist " alongside cash, without replacing it ", banks see a risk of disintermediation and fear that their customers will massively turn to this new form of money, which would lead to a drop in deposits.
In view of these potential limitations, a number of proposals are under consideration. For example, ECB Executive Board member Fabio Panetta suggests making it less attractive to hold digital euro assets above a certain threshold. In addition, the financial authorities believe that banks will have a role to play as intermediaries in opening accounts, carrying out checks and equipping physical and online businesses. More generally, the project aims to anchor the notion of " central bank money ", which could be threatened by initiatives from private players. Regulators often take as an example Meta (Facebook) and its "Diem" digital currency project, which has now been officially abandoned.
The digital euro project is gaining momentum. Theannual survey by the Bank for International Settlements (BIS) shows that nine out of ten banks are looking into digital currencies, and more than half are developing them or have already launched experiments.