In April 2022, the European Commission launched a targeted consultation on a digital euro. The objective: to gather information on the expected impacts of the digital euro on key industries, users, chambers of commerce and other stakeholders in international trade.

The ABBL, which also participated in the ECB's 2021 consultation on this topic, has submitted its response to the EC and provided comments to the European Banking Federation. Here are the key points.

The ABBL believes that the digital euro has certain advantages, both for individuals and for merchants. It offers an alternative to cash, and innovations such as the programmability of a digital euro can be built by private actors using properly regulated digital forms of money.

The ABBL supports an intermediated digital euro model, which would reduce disruption to the European financial system. Intermediaries can facilitate the use of a digital euro by integrating digital euro accounts into user interfaces and payment methods, and maintaining access to digital euro balances through applications or sites that consumers already use to manage their finances. Many of these functionalities could be provided by existing private providers. In addition, technologies such as near field communication (NFC) and QR codes could enable offline payments in digital euros. Finally, these intermediaries can perform the necessary AML/CFT checks.

While the acceptance of a digital euro will not lead to its adoption, the lack of acceptance would be detrimental to its development in the context of pan-European payments. If not properly designed and calibrated, a digital euro could negatively impact economic growth, reducing the availability and cost of credit for the economy as a whole, as well as financial stability. 

We do not expect any significant increase in AML/CFT compliance costs in the case of an account-based digital euro used online.

Some privacy features of a digital euro can be supported: hiding the payer or the payee from each other, hiding the identity for low-value offline transactions.

The digital euro should be accessible to euro area residents and tourists visiting the euro area.

The ABBL thanks its members, in particular its Digital Euro Task Force, as well as the representatives of the Luxembourg Central Bank for their contribution to the debate. The ABBL will follow the Digital Euro closely and will keep its members informed about the next steps.

By Andrey Martovoy – Innovation & Digital Adviser