European Banking Federation Shares Its Vision Of Digital Euro

The European Banking Federation (EBF) has published a paper outlining its vision for the future digital money ecosystem, specifically the retail digital euro. 

iexclusivenews reports that the carefully worded paper expressed commercial banks’ values and concerns about the digital euro.

This online news outlet understands that the paper, released on March 28, emphasized the bank’s values, such as stability and privacy.

It called for closer public-private partnership in the introduction of the digital euro.

“There is currently no dialogue in place to address the fundamental changes and risks to the monetary and financial system,” the paper said.

At the same time, there needs to be a framework for permanent high-level engagement.

The EBF ecosystem vision placed a strong emphasis on the private sector’s contribution to all areas, starting with infrastructure, where Europe needs to rely less on foreign “actors.”

The digital euro, a wholesale central bank digital currency (CBDC), and bank-issued money tokens would be the three components of that ecosystem.

In the EBF vision, the digital euro should have three levels, with a European Central Bank role and two industry levels.

What You Should Know

The first to interact with the Single Euro Payments Area and an Industry Level B that “would be subsequently developed and operated by the private sector, in compliance with the principles set out in the previous layers.” Those principles have yet to be developed fully:

“The European market needs the authorities to clarify the interaction of different and converging policy objectives, especially when it comes to the development of pan-European payment solutions at the Point of Sale / Point of Interaction.”

The paper took care to only mention blockchain technology in relation to specific elements of its hypothetical ecosystem.

It was assumed that a wholesale CBDC would run on distributed ledger technology, where interoperability is essential for enabling cross-border transactions with central bank money (DLT).

Furthermore, the EBF’s vision for “business needs such as automated industrial processes that run on DLT and use smart contracts” placed a high priority on bank-issued money tokens.

However, iexclusivenews Nigeria reports that these tokens appear to correspond to Digital Euro Scheme Industry Level B.

The paper noted that these solutions would also require more standardisation.

The EBF represents 33 national banking associations and 3,500 individual banks.