🌎 European Central Bank Explores Potential of Digital Euro

During her presentation at Money20/20, Evelien Witlox, Digital Euro Director at the European Central Bank, discussed the potential implications of a digital euro and its impact on the Euro payment landscape. Noting a decrease in cash usage across Europe, Witlox suggested that a digital euro could be in development.

“I think there is certainly a high likelihood we will invest in the digital euro, but it’s not inevitable at the moment,” Witlox said.

Witlox highlighted the European Central Bank’s intention to proceed cautiously, even as pressure mounts from the decline in cash usage and the emergence of alternative currencies and digital payments.

“We’re here in Amsterdam, and only one in five transactions are done by cash… with all the other transactions being digital,” Witlox said.

The ECB is exploring the introduction of a digital euro, which would function as an electronic version of physical cash. The digital euro would become legal tender if issued, enabling the general public to use central bank money for everyday transactions.

This could benefit citizens as merchants offering digital forms of payment would be required to accept the digital euro, according to Witlox.

Security and Privacy

The push towards the digital euro is partly motivated by fears that Europe’s dependence on payment services outside the region could undermine economic independence and the security of payments, both private and public.

Witlox expressed concern about Europe’s reliance on non-European payment systems and suggested that a digital euro could bolster economic sovereignty and ensure data security.

“Digital inclusion is crucial. The digital euro will be designed to ensure everyone can participate in the digital economy,” said Witlox.

Witlox also stated that the ECB has no desire to monitor user and client transactions, emphasizing that privacy and security are top priorities. These concerns would be addressed through technical solutions such as ‘privacy by design’ and offline digital euros. The ECB has no plans to create programmable money.