The European Banking Federation (EBF) has described the digital euro as an important milestone for Europe’s global financial inclusion.
In the paper detailing its vision, the EBF sets out to list its predictions on the changes Europe’s financial infrastructure will undergo in the near future. According to the banking body, Europeans will soon manage three main types of digital money – a retail digital euro, a wholesale CBDC and bank-issued money tokens.
This is so that Europe can not only accelerate innovation in the process, but to also ensure it remains at the front of the global digital finance market.
Large focus is given to the retail digital euro, which the EBF warns that without adding value to consumers and being appropriately designed by the private sector, it will fail to meet evolving payment needs.
The EBF considers the issuing of the retail digital euro as ‘raw material’ to be most appropriate, which when done with a strong market involvement will allow the industry to “fully deploy its innovative potential to deliver future-proof and competitive payment solutions to the European market”.
According to the paper, some of the other qualities that the digital retail euro must exhibit in order to maintain its financial stability is to be bank-funded, as well as to act as a foundation that the private sector can use to build on their solutions and services.
Wim Mijs, CEO of EBF, said: “Decisions made about the digital euro will reverberate through Europe’s financial ecosystem for years to come. The choices made today can support a strong, resilient, innovative and competitive payment ecosystem that enhances European strategic autonomy.
“However, the right foundations must be in place if a retail digital euro is to come with a positive risk/benefit ratio. Effective and in-depth cooperation between the public and private sector is needed to ensure an added value for consumers, along with the right design, a robust and sustainable business model underpinning it, and a strong role for the market in designing payment solutions.”
