Je ne peux m’empêcher de dire quelques mots en français pour remercier Hervé Sitruk, son équipe et France Payments Forum pour l’invitation. Merci aussi à lui aussi d’avoir rappelé cette date historique du passage à l’euro qui nous est chère à tous. J’ai moi-même eu le privilège de travailler sur ce passage et sur l’introduction des pièces et billets en euro. Plus de deux décennies après ce passage, l’introduction de l’euro digital est le développement naturel de notre monnaie. Je vais maintenant continuer en anglais.
The timing of this conference is almost ideal. I say “almost” because if we had met in about a week, we could actually be talking about the Council’s position on the digital euro that it will adopt in a few days. So, this is a very important development. This means that Member States are agreeing on a text. They are supporting the digital euro, and this sends a strong message to all. It will send a strong message to the European Parliament, which is the institution that is involved in the co-decision. It will also show to the industry, to the merchants and the public at large, that Member States support the digital euro and are committed to it. In the current geopolitical context of high uncertainty, the digital euro has become a must to ensure Europe’s sovereignty, autonomy, and resilience.
So, I beg to differ to what was said before. This is what is interesting in this debate. In the payments field, the introduction of the euro 25 years ago catalyzed the development of SEPA, which was an excellent initiative for credit transfers and direct debits, but has not achieved the SEPA for payments at the point of sale or e-commerce, which have been increasingly in the hands of multinational companies from outside of Europe. And of course, Instant Payments are on the rise. At the Commission, we support them so much that we adopted a proposal that was then passed in legislation, to make Instant Payments the “new normal”.
So, for sure we hope that it will also contribute to reaching autonomy in payments, which this time remains a challenge because even though we have good domestic payment solutions, in a few countries in the EU we don’t have yet a cross-border retail payment system that is pan-European. We have from some promising initiatives. We do hope that they work. We support them as much as the digital euro, I want to be clear about that. This was already a key objective of the Commission’s retail payment strategy that was adopted back in 2020.
The world has changed. The payment ecosystem has changed as well. Payments is a very dynamic sector, and we have to look at the new landscape and see what we can do to promote both private sector solutions and the digital euro: that is where the word “consensus” is important. And in that context the digital euro has been conceived to open new ways to achieve sovereignty, autonomy and resilience.
23 years exactly after the introduction of euro banknotes and coins, when everything is becoming digital, it is time to provide consumers with a digital form of cash that they can use throughout the euro area, alongside private sector solutions. It was essentially the goal of the Commission’s proposal which was adopted back in 2003.
Now, let me go back to what I said at the beginning and the discussions at the Council where, as you know, the Commission is involved as well. Where do we stand?
As I said at the beginning, we are reaching an important milestone and in a matter of days the Council will publish its negotiating mandate towards the European Parliament. During these two years of negotiations, we have further developed our thinking on many of the important policy issues included in The Commission’s proposal : the holding limits, the compensation model, the balance between privacy and the fight against money laundering and terrorism financing, and resilience.
I believe that the outcome of this process was a good one. We have achieved a balanced compromise which improves and preserves the key elements of the Commission’s proposal. Unfortunately, I cannot be more precise or give you too many details, but you will see it soon. Let me give you some points.
First on the holding limits. This was covered by the previous speaker from the perspective of stability, and perhaps with an excessive pessimism in that regard. The ECB has been doing a lot of assessment of the financial stability risks, and some very complicated calculations which essentially lead to the outcome that the future holding limits that the ECB is designed to set would ensure that these risks are mitigated. In addition, you likely know that the Eurogroup earlier this year (in September) agreed on a mechanism to ensure that these limits protect the financial sector against financial stability risks. And this is about the Council being able to set ceilings below which the ECB has to set the holding limits. This is an additional safeguard and it should reassure the banking industry.
On the compensation model, we have also found a balanced compromise which will allow us to calibrate the caps based on the market evolution and taking into account the diversity of the national payments landscape, and we have also addressed the so-called open funding issue.
We have ensured that the offline digital euro works effectively with a series of measures and ensures an adequate balance also between privacy and the fight against money laundering and terrorism financing.
Finally, we have strengthened some resilience features, in particular with regard to offline.
Now, we need to concentrate on the next steps. The immediate next steps are the negotiations with the European Parliament. In order to have an agreement, the positions of the Parliament and the Council need to converge, there needs to be this consensus.
We need to discuss much more these key issues also with the private sector. In this regard, the banking industry should also consider the opportunities. The digital euro will be distributed indeed by banks, and banks will be compensated for that. So, banks, by definition can benefit. They can also, and they should, use a digital euro platform to innovate. Actually, the future of payments is payments with value. Convenience and safety are considered as a given by consumers, and consumers want more than that. Today, we have a more sophisticated landscape than we had 5 years ago: we have stablecoins and Instant Payments, and we have new initiatives on the way, to leverage on these developments, plus a lot of evolution in technology with artificial intelligence etc.
The market is very dynamic, and we need to have a comprehensive retail payments strategy that includes all these elements. I can very much agree on that with previous speakers, and the new competitors are really eager to serve that market. So, we should keep that in mind.
Another important aspect in the Commission’s proposal is interoperability. The ECB is working on reusing existing standards as far as possible, and they are developing standards for the digital euro for the point of sale and e-commerce that will be, by definition, European and which European private solutions like Wero or EuroPA will be able to use as well. That will facilitate acceptance of these solutions throughout the euro area.
Now, it’s important again to really work together in ensuring that European solutions and the digital euro work hand in hand, and that the investments to be done are compatible and benefit both. We strongly believe that they can benefit both. This is perhaps the key difference with the positions expressed before. Interoperability should now really work in practice. That’s why it’s important to discuss between the ECB, private actors and all those involved. It should pave the way for synergies.
From our perspective, synergies are possible. The digital euro has not been designed to replace, but to complement private sector solutions, very much like today cash coexists with digital private solutions. The digital euro can coexist with Wero and others. The digital payments part is getting bigger as digitalization advances. There is no reason why there is no space for different payment solutions. Consumers will choose.
We believe that this objective is within reach. But for that, one should see the digital euro more as a friend rather than as an enemy. And make no mistake, the digital euro seems to be coming. And this is actually good news.
We will make it all together good news.
Thank you for your attention.
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