The introduction of the digital euro could cost European banks billions in the initial years. “Our estimates based on the banks’ data assume implementation costs of between four and six billion euros over four years,” said ECB Director Piero Cipollone on Thursday before an Italian parliamentary committee. The Italian daily newspaper La Repubblica reported on this. The mentioned sum corresponds to approximately three percent of the banks’ annual expenses for maintaining their IT systems.
Cipollone also explained that the start-up costs for the European Central Bank’s (ECB) new digital currency are estimated to be around 1.3 billion euros. In addition, there will be operating costs of approximately 300 million euros. He did not specify whether this is an annual amount.
The ECB aims for a launch of the digital euro in 2029. However, there is still no agreement at the political level in Europe. Last October, the central bank council decided to continue preparations for the introduction of the European central bank currency. If the regulation for the introduction of the digital euro is adopted this year, a pilot project and initial transactions could be initiated from mid-2027. The ECB will select the banks that wish to participate in the pilot phase.
Supplement to Euro Cash
The digital euro is intended to supplement, not replace, euro cash. Cipollone also emphasized this. “Nobody is forcing anyone to use the digital euro. The ECB is perhaps the loudest voice defending cash in the Eurozone, if you follow the debate,” he said. Regarding transactions with the digital euro, “we only see codes, we don’t know who is behind these people.” He added: “Only the banks have the identification data. The ECB knows nothing about the transactions. As for the rumors that the ECB is creating a Big Brother, that we will control how people pay, people’s freedom, I believe we can classify these as fake news. It is technically impossible.”
With the digital euro, the EU wants to become more independent of US financial service providers such as Paypal, Apple Pay, Mastercard, or Visa. “The digital euro would offer a European alternative that is accepted throughout the Eurozone and would give merchants more negotiating power when negotiating service fees,” said Cipollone. EU citizens outside the Eurozone could also pay with digital euros if their national central bank reaches an agreement with the ECB, according to the ECB Director.
Last month, the president of the Rhineland-Palatinate Savings Banks Association, Thomas Hirsch, criticized that the digital euro offers high costs and little benefit for customers. He also stated that an association of European banks, including the savings banks, has already implemented a pan-European payment system called Wero. Speaking before the banking committee in the Italian Senate, Cipollone stated, according to the Reuters news agency, that banks will be able to cover the incurred costs through the fees they receive from merchants. This applies to the digital euro services they offer. For merchants, there will be an incentive in the form of a fee cap. The ECB itself will not charge any fees for its network service.
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