ECB eyes entry to digital payments space as CBDC takes shape

‘Successful, but not too successful,’ was Ulrich Bindseil’s pithy summary of how a digital euro – with a direct payments infrastructure issued by the European Central Bank – would strike the public-private trade-offs bedevilling central bank digital currency units the world over.

Bindseil, director general of market infrastructures and payments at the ECB, spoke to OMFIF about the conclusions of the investigation phase and the commencement of the preparation phase for the digital euro. A final decision to deploy it awaits approval in national legislatures. It will probably also undergo regulatory modifications, such as an obligation for merchants, payment service providers and banks to distribute and accept it.

The ECB seems to be aiming for a careful balancing act, one which is more proactive on behalf of the public sector than the Bank of England’s apparent intentions. Bindseil observed that the ECB ‘does not want cash use to decline’ but accepts it will do so. It intends to retain as many of the physical euro’s characteristics as a ‘public good’ as possible in digital form. But it is starting from a different place to the Bank of England. Physical cash in the UK is already obsolescent in payments, and banks and payments service providers have seamlessly replaced it with an electronic ‘private money’ infrastructure. Cash use for payments in Germany, in contrast, is in gentle decline but still at 57%.

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