On 7 March, WSBI-ESBG’s Managing Director, Mr. Peter Simon, participated in a panel on the digital euro jointly hosted by MEP Jonas Fernandez (S&D, ES) and Pablo Zalba Bidegain (Former MEP, Managing Director at Deloitte).

The panel began with a presentation of Deloitte’s recent digital euro impact assessment in Spain, titled “The adoption of the digital euro in Spain and its impact on banks and businesses”. This was followed by a lively discussion between panelists. The panel was made up of two MEPs, two representatives of the banking and financial sector (including our MD Peter Simon) and the head of a leading Brussels think tank.
The Deloitte presentation began by stating that financial institutions must see the digital euro as an opportunity and not as a threat – and the project will only succeed if they do. The study itself arose from a concern that consumers’ and businesses’ views have hitherto been let out of the digital euro policy discussion.

The findings of the report recognised that education and awareness is key but takes a lot of time (many Spanish consumers were unaware of the digital euro and uncertain of the benefits of the use case, while businesses were more aware and, perhaps consequently, supportive). The conclusions of the study took a more critical note: it found that, in examining the use cases, and in recognizing that consumer, banks and merchants will all need to take a share of the cost of operating a digital euro, it was difficult to see use cases that justify this cost. Deloitte understood the monetary sovereignty argument but considered that EU would be better served with utilising existing payment infrastructure.
MEP Gilles Boyer (a French rapporteur of the Renew group and shadow rapporteur for the digital euro) began the discussion, followed by MEP Jonas Fernandez (of Spain and the S&D group). Both MEPs understood the concerns of the report (and those expressed separately by the banking industry) but the threat of private digital currencies to both the EU’s monetary sovereignty and bank stability is too great to not develop a public competitor.

Mr Simon acknowledged the justified concerns of Brussels policymakers and expressed the ESBG’s general support for the project and its strategic objectives. However, he emphasised the significance of key decisions on how a digital euro would operate. For instance, a focus should be given to use cases which are cash-like and attractive to consumers. Possible use cases could be found in instant and private payments in e-commerce, at the point of sale, person-to-person and offline transactions. Of these, he said, only offline payment would actually require a user to hold a limited amount of digital euros – where in the other scenarios the money would be directly drawn from the users private account and a zero holding limit can apply. Mr Simon went on to urge consistent simplification of the functionalities and design of the digital euro to ensure cost-efficiency and financial inclusion.