Digital euro

And the sovereignty of a payment system is clearly one where, from my perspective, European banks have to make up a lot of room and the runway gets shorter in executing.

And as such, I personally think that you can discuss a lot about the necessity of a digital euro or whatever comes up in terms of stable coins or account-to-account payments or whatever.

But we need to be more self-sufficient in terms of our own payment infrastructures.

We need to be more innovative and get rid of the big American networks.

way.

Sounds good.

And to be fair, I think the ECB has been very clear about that as well, right? With the digital euro positioning as a means

of being more sovereign, being more independent.

cash.

And maybe also to address some of these conspiracy theories, so the digital euro is only going to come to replace cash, what would you say to that?

No, the digital era will complement cash in a nice way because we see that around 20% of the daily shopping is now online.

And cash is not an option there.

In general, from the point of view of the European Central Bank, there is a fragility in relation to cryptos.

Of course, at the same time, we see that Europe is now advancing to the digital euro.

It's a fact that the Digital Euro will happen and the goal is to have it by 2029.

The digital euro.

I believe that when we move forward with the digital euro, when the rule of law moves forward and we gain more experience with this rule, because we are still in the first stages, then it would be easier for banks to try to be more flexible with crypto.

Now there are some fears on the banks' side.

For this reason, there are some

We

Hello, everyone, and welcome to another edition of Payments on Fire.

In this episode, we'll be going into depth on the Digital Euro project.

As with many institutions, the European Central Bank is considering how to monetize central bank money.

One way to do this is to issue a retail CBDC or central bank digital currency.

Many central banks around the world have been exploring a retail CBDC, and the live examples include Nigeria, China, India, and the Caribbean, specifically the Bahamas, which was the first country to issue retail CBDC, and Jamaica.

The ECB has also for years been researching and exploring this topic and is preparing to issue a pilot for a retail CBDC in the second half of 2027.

For listeners who regularly tune into this podcast, we briefly introduced the digital euro and some of its considerations in an August 5th episode on EU payments regulation.

We'll be going into more depth on the digital euro in this episode, which is of course dedicated to the topic.

yeah.

Of course, you cannot, and that's, again, one of the basic flaws, you cannot just create a market by regulation well you can and these days we have these why did pix work in brazil or why does upi work in india well this is i will call it create network effects by brute force i.e regulation which we will also see probably with the digital euro i call that creating networks by brute force but if you leave it up to market participants and cooperation between market participants it's to create those network effects and good solutions it's it's much more complex because the By the end of the day, all these market participants are commercial institutions.

They want, if you have a good idea, the boss will say, okay, but show me the money.

Where's the money? Why should I invest in good APIs? So the lack of good business case, especially from, I think, the incumbents, the account servicing institutions, where is the money? Of course, we need to be compliant.

So there will be more legal clarity.

Less discussion, hopefully, move on, but then still you need to agree what is the problem we are going to solve? What is the real market demand? What are the use cases and what will be the business? Because by the end of the day, that's the other lesson learned.

And I think the commission also in the FIDA context understood that also with Digital Euro, by the way.

We're talking about directive again.

Bye-bye.

The European Central Bank now talking about the digital euro they're going to implement.

What is it with Europe? They're like moths to a bug zapper.

These people are just constantly trying to figure out ways to put themselves into tyranny.

The European Central Bank is moving ahead with the digital euro and expects to begin a 12-month pilot during the second half of next year, a year from now.

36 banks and payment providers have already been selected to participate.

Legislation is expected to be completed by the end of 26, and the ECB, the European Central Bank, intends to be ready For a potential first issuance during 2029, Brussels is spending approximately 1.3 billion euros to prepare the system, with projected operating costs of 320 million euros per year beginning in 2029, while pretending the final decision has not already been politically engineered.

I'm at armstrongeconomics.com, by the way, for this article, the headline, Europe's digital euro is coming in 2029.

Just one, one funding round, and then few, few, um, transactions.

And then I think the most interesting news, what we actually saw newsworthy things were quite much around the digital euro.

So there were some cases around the pilot, which we can also dig into today.

But yeah, holiday season as expected.

Maybe we should start with you this time, Ville.

What was the headline that caught your attention that you thought was, uh, noteworthy to look into a little bit further?

Yeah, maybe I need to also, uh, note that the views and opinions are my personal ones, uh, not of anyone else or any other institution because the, um, uh, the news that I picked, uh, is quite close to, uh, one of my favorite topics, uh, and that's the digital euro.

Like Janne mentioned, the, um, the, the ECB, uh, was quite active, relatively active, uh, in, in July in providing updates, uh, about the digital euro.

When we met recently, you made some rather unique, controversial, different statements, which I always find refreshing.

For example, about the digital euro.

You said that banks should leverage the digital euro.

Many banks just hate it and don't like it.

You actually say there's some advantages to it and the banks should leverage that.

And we can connect this actually back to something you mentioned earlier there, which is that the first retail central bank digital currency in the world was introduced in Finland in the 90s.

It was called the Avant Cash.

And there's a lot of parallels on what happened and what were the learnings of that project compared to what's going on with the digital euro.