As the digital euro project approaches the end of its investigation phase, Ulrich Bindseil and Evelien Witlox from the European Central Bank provided attendees at Sibos with an update on the project’s progress and the next steps.
While a final decision on issuing a digital euro has yet to be reached, the ECB has been actively exploring options ahead of a potential launch, which could happen as early as 2026. Although cash continues to dominate payment volumes in Europe, its usage has been declining, a trend that accelerated during the pandemic. Bindseil emphasized that “cash is our baby” and reaffirmed the bank’s commitment to ensuring its continued existence.
However, with the decrease in cash usage, there is an increasing need to maintain central bank money, and a digital euro is viewed as a way to preserve that system rather than revolutionize it. Bindseil also aimed to alleviate concerns regarding a digital euro’s effect on financial stability, stating that “the excessive use of the digital euro as a form of investment and the associated risk of sudden large shifts from bank deposits to the digital euro should be avoided,” according to an ECB report. Consequently, there will be limits on individual holdings, and the distribution model will utilize supervised intermediaries.
Acknowledging privacy concerns, Bindseil mentioned that the ECB has no intention of accessing or storing users’ private information. Witlox added that the digital euro would include an offline component, allowing payments to be processed at close range without third-party validation, similar to cash.
As the ECB nears a decision on advancing to the next development stage, Witlox reiterated that a crucial factor will be whether a digital euro can simplify payment processes for Europeans by offering a harmonized method of payment.