• The European Central Bank (ECB) is researching the potential of a single central bank digital currency (CBDC).
• Representatives from both private and public banking institutions share their opinion on the digital euro.
• ECB officials are aware of customer concern over adoption of the CBDC and promise that personal data will not be collected.
Digital Euro Research
The European Central Bank (ECB) is researching the potential of a single central bank digital currency (CBDC). Representatives from both private and public banking institutions have expressed their opinion on the digital euro.
Use Cases for Digital Euro
Evelien Witlox, program director for the digital euro at the ECB, has laid out three use cases prioritized by the ECB – person-to-person payments; consumer-to-business payments; and payments to or by government. Jerome Grivet, deputy CEO at French bank Crédit Agricole, has suggested that in order to avoid competition with private banks,the digital euro should be limited to use as a payment method rather than a store of value. Similarly, Burkhard Balz, member of executive board at Deutsche Bundesbank, has underscored that economic incentives should be provided in order to involve intermediaries in distribution services for the digital euro.
Customer Adoption Concerns
Private bankers such as Grivet have raised concerns about customer adoption of CBDCs due to examples such as Chinese digital yuan adoption which have not been successful. In response to this concern, Witlox promises that personal data will not be collected when using CBDCs.
Competition between Private Banks
The inevitable competition with private banks raises questions about how customers will react to this new form of money and how well it will be adopted by consumers. Private banks are concerned about their business models being threatened if they are unable to compete with central banks providing high quality financial services through CBDCs.
To ensure successful implementation and adoption of CBDCs across Europe, it is important that economic incentives are provided for private intermediaries involved in distribution services and that personal data collection is avoided. Additionally, there is an interest in understanding customers’ reactions towards this new form of money so that proper measures can be taken in order to increase its desirability amongst users.