ECB’s Cipollone says digital euro will protect European banks, card schemes

By Valentina Za

MILAN, Feb 18 (Reuters) – The digital euro will be designed to protect European card schemes and keep banks at the core of the region’s payments system, a senior European Central Bank policymaker said on Wednesday.

As a currency managed directly by the ECB through accounts with the central bank, the digital euro project has raised concerns among banks they could lose their role in handling payments.

ECB Executive Board Member Piero Cipollone said changes in the payments industry meant banks faced that risk regardless of the digital euro, which he argued would actually help them.

The digitalisation of payments has reduced the role of cash, currently the only form of central bank money, prompting the ECB to pursue a digital currency to compete with private forms of money.

Addressing Italy’s banking association ABI, Cipollone said the digital euro meant “preserving the central position of banks in payments”.

“Banks could lose their role in payments not just because of stablecoins but also due to other private solutions,” he said.

Banks risked not only losing revenues but, more importantly, access to their customers’ payments data, information they need to offer more profitable services.

NATIONAL SCHEMES

The ECB also wants to protect European payments schemes such as Italy’s Bancomat card scheme and Spain’s Bizum peer-to-peer scheme, Cipollone said.

National schemes will be able to issue cards that work across the euro zone by using the digital euro infrastructure under “co-badging” accords.

Such functions will be available long before the digital euro’s planned launch in the second half of 2029.

To avoid cannibalising domestic schemes, the digital euro system will be structured so it remains cheaper for shopowners to use those networks, Cipollone said.

“The cap on the fee that merchants will pay on the digital euro network will be lower than what the international payments network, normally the costliest, charges, but higher than what domestic payments scheme, normally the cheapest, charges,” he said.

Only eight of the 21 euro zone members have a national payments scheme, with the others relying entirely on international networks.

“The digital euro will effectively favour domestic payments schemes,” Cipollone added.

Fraying transatlantic ties have led the ECB to classify as a strategic risk the fact that more than three quarters of European transactions are processed through international payments schemes such as Visa or Mastercard.

Visa has been the sole provider of card payments at the Olympics since 1986 and will be until 2032.

After stalling for two years the ECB’s legislative proposal that would allow it to issue the digital currency, the European Parliament this month gave its first major backing to the digital euro.

In December, the EU Council did the same, calling the project key to Europe’s economic security and saying it would be “available to the general public and businesses to make payments anytime and anywhere in the euro area”.

(Reporting by Valentina Za. Editing by Kim Coghill and Mark Potter)