A Digital Euro Beyond Impulse, Act Once
A new study highlights that to ensure widespread adoption, the digital euro must offer a compelling value proposition and clear benefits to consumers and merchants in the EU, while the EU’s legislative framework should allow for these benefits to gradually emerge over time.
There is a need to minimize the risk of crowding out European private solutions, which would impact competition and the attractiveness of the European payments market, while at the same time hinder the digital euro’s adoption.
🎯 Policy Recommendations:
1️⃣ Clear Value Proposition:
💶 The benefits of a #digitaleuro must be well-defined and understood, particularly in comparison to existing payment solutions.
💶 A detailed user-case analysis is needed to clarify its scope, target user base, and likely demand.
2️⃣ Cost Efficiency and Economic Viability:
💶 Conduct a holistic cost-benefit analysis to understand the impact on current stakeholders, including banking and payment infrastructures.
💶 Ensure that the digital euro launch does not result in an unsustainable economic model with high operational costs.
3️⃣ Justification for Holding Limits:
💶 Better justify and explain the necessity and effectiveness of holding limits for addressing AML/CFT and bank disintermediation concerns.
💶 Conduct an in-depth analysis of holding limits, considering the payment needs of the European public.
4️⃣ Start Simple:
💶 Begin with a basic digital euro offering only the most essential functionalities.
💶 Incorporate additional features as needed based on user experience and utility.
5️⃣ Build on Existing Infrastructure:
💶 Maximize reliance on current mechanisms in the payment infrastructure to minimize the need for extensive adaptation.
💶 Ensure interoperability with existing systems, such as SEPA instant payments.
6️⃣ Regulatory Framework:
💶 Establish a regulatory framework that promotes a level playing field for the entire payment ecosystem, including digital euros.
💶 Extend current regulations to cover the digital euro ecosystem.
7️⃣ International Collaboration:
💶 Make decisions regarding a digital euro in collaboration with major currency areas (e.g., the US, the UK, and Switzerland) to maintain the attractiveness of the euro relative to other major currencies.
💶 Prioritize interoperability between the digital euro and other major CBDCs to enhance global acceptance.
https://www.ceps.eu/ceps-publications/a-digital-euro-beyond-impulse