POSITION | ECONOMIC POLICY | PAYMENTS SYSTEM
The digital euro Needs of industry must not be neglected in establishment process
28. September 2022
A digital currency for Europe Digital currencies have become an integral feature on the innovation horizon of payment services. This has also become clear to the major central banks around the world and they are working on a digital version of their central bank money. In October 2021, the European Central Bank launched a project to intensively investigate the establishment of a digital euro. A decision on the possible implementation of this project is slated for October 2023. Until then, extensive analyses will be conducted to investigate the possible impact of a digital euro on a wide range of disciplines. Design of digital euro should trigger firms’ innovation potential A digital euro as an additional means of payment alongside notes and coins would be a step forward both for citizens and for German industrial enterprises. The digital version of European Central Bank money or certain regulated private sector alternatives could serve as a catalyst for the digitalisation projects of these firms, leading to efficiency gains in payment transactions and commercial processes and creating new innovation potential. If private sector alternatives, such as tokenised commercial bank money, prove necessary, these should conform to uniform standards. The functional design of the digital euro is key to ensuring that the potential of the digital euro is fully exploited. We support the approach of making the concerns of citizens a top priority in order to achieve the broadest possible acceptance of the digital currency. Trust and reliability are key elements in the success of a digital currency. However, the full innovation potential of the digital euro can only be tapped if the needs of businesses are also sufficiently considered. The central concerns of industry are the programmability of payments, the governance system, data protection considerations and some practical design issues, such as availability and denomination. We would also urge that aspects such as international competition and the related issue of the time factor are taken into account in the current analyses. We believe that regulatory sandboxes or test environments will be needed to test different applications in the best possible way.