At a glance Digital euro

20.10.2023 DE

Around 25 years ago, the euro was introduced as a single currency in the euro area. The euro is a European success story. Much time has passed since its launch, and the world has evolved – including when it comes to payments. Back then, paying by watch or mobile phone was unthinkable. Today, it is just as much a part of people’s everyday lives as online shopping. As our world becomes ever more digital, cash is being used less, and it does not work online. We need a supplement to coins and notes. And that is where the digital euro comes in.

The digital euro at a glance

Usable anywhere in the euro area, just like cash today: the digital euro would ensure that, as we head into the future, the aspects that many people cherish when it comes to cash will still figure in the digital world, too. That includes, above all, widespread acceptance. Many payment methods available today can only be used within national borders. Barely anybody in Germany has heard of Spain’s popular payment solution “Bizum” or the online payment system “iDEAL” in the Netherlands. And Germany’s girocard only works abroad thanks to co-badging arrangements with Mastercard or Visa.
An all-rounder, for every payment situation: alongside its ability to be used anywhere in the euro area, the digital euro would present a simple way to navigate any payment situation. Whether you are making a purchase in-store, buying something online or sending money to friends and family, the digital euro would offer the chance to pay contactlessly, via QR code or by specifying the payee’s “alias” (e.g. giving their email address).
Even “offline”: in the same way as you can keep a stock of cash once you withdraw it, it would be possible to save digital euro on an end device, such as a smartphone, up to a set limit. People would still be able to carry on making payments even if the network was down or power cut out completely – provided their smartphone was not out of battery. This makes for a more resilient payment landscape in Europe.
Maximum privacy: euro area central banks would not be able to match online payments made using the digital euro to the person making the payment. Offline payments would offer a similar degree of anonymity to cash and could not even be tracked by banks and payment service providers. Only the payer and the payee would know the personal transaction details relating to a given payment.
Free to use: just like cash, the digital euro would be a public good. Residents of the euro area could pay with the digital euro free of charge.
A platform for new products and services: the digital euro has the potential to unify the European payments market, unlock new business models through harmonised standards and support future technological developments. Payment service providers would gain an immediate euro area-wide reach. The digital euro could provide a platform for them to develop value-added services – like conditional payments and loyalty programmes – within their offering.

The digital euro – boosting European sovereignty

No other digital means of payment around today offers the full range of features described above. But there’s another gap that the digital euro is closing too, namely the absence of a genuine European solution for payments.

Looking at the European payments landscape as it stands today, almost two-thirds of all digital transactions in Europe are settled by non-European payment service providers: US groups such as Visa, Mastercard or PayPal. Chinese payment giants such as AliPay or WeChat Pay are also gaining market share.

The digital euro would provide a European infrastructure that can be used throughout the euro area. Euro area central banks would be responsible for running it and issuing the digital euro – just like with euro banknotes. European payment service providers would use this infrastructure and make the digital euro available to their customers. Mirroring the way cash is supplied at ATMs, banks – for example – would provision customers with the digital euro via online banking platforms and banking apps.

The digital euro would thus play a key role in preserving European sovereignty: it would be the first and only electronic means of payment based on a European infrastructure that people could use seamlessly throughout the euro area. That will make Europe less reliant on non-European payment service providers at a time when geopolitical tensions are high, and it will strengthen the resilience and international role of the euro.ncrease, this will make us here in Europe less dependent on non-European payment service providers and strengthen the resilience of our infrastructures.