DIGITAL EURO: EBF VIEWS
EBF paper #1: Strategic considerations
The EBF takes note of the work that is done by the Eurosystem to investigate a digital euro that could be aimed at a retail audience, should the need arise. A central bank digital euro should first and foremost be a viable and optimal solution to a clearly defined unserviced need in the market, for which no other more efficient solution exists. In addition, it should benefit private individuals and corporates and the economy as a whole, while avoiding destabilizing the financial system. Therefore, before the ECB decides to issue a CBDE, it should be clear what a CBDE can contribute that is not already covered or covered by private payment and deposit solutions.
Taking into account their crucial position in the financial and payment systems, and for the financing of the economy, European banks welcome a continuous exchange with the ECB on the digital euro project. The underlying needs, possible – effective – alternatives under these objectives as well as the design principles should be further explored with representatives of the European society at large. EBF welcomes detailed discussions with sufficient time before a decision on a project launch.
The EBF stands ready to engage with the ECB in conducting additional assessments and applying investigative tools beyond the launched public consultation.
EBF paper #2: Impact on bank funding
A digital euro would need to benefit European citizens and the economy as a whole, while avoiding any destabilizing effect on the financial system. Moreover, in a possible digital euro ecosystem, it should be very clear how private sector payment and deposit solutions would go hand in hand with it.
Reflecting on the idea of limiting digital euro holdings to address negative consequences, in EBF paper #2 we share our views on the possible cyclical and structural disintermediation of bank funding. We also raise questions as to the implications of such disintermediation and the availability of alternative funding sources, while also looking at what this could mean for the role of the ECB itself.