A top European Central Bank policymaker stated Thursday that the introduction of the digital euro might cost European banks between 4 billion and 6 billion euros ($4.7 and 7.1 billion) over four years.
The new digital-only central bank currency that the ECB is developing is expected to cost about 1.3 billion euros to establish, according to Piero Cipollone, a member of the ECB Governing Council.
To preserve the bloc’s monetary sovereignty and economic stability, the European Central Bank (ECB) is awaiting European Union legislation to introduce the digital euro.
It sees this as a means of bringing Europe’s disjointed payments system together, limiting the involvement of non-EU providers, and keeping public money relevant in a digital economy.
“Banks will be able to recover costs,” says Cipollone
Based on information we obtained from banks, the implementation will cost between 4 and 6 billion euros over four years, or around 3% of their annual IT system maintenance budget,” Cipollone stated.
He was discussing the digital euro initiative, which he is in charge of overseeing as part of his payments responsibilities at the ECB, with an Italian parliamentary committee on banking.
By collecting fees from merchants for the digital euro services they offer, banks will be able to cover the expenses.
Banks will provide the smartphone application required to make payments with digital euros.
However, because the ECB won’t charge for its network service, banks won’t have to subtract from merchant fees the costs they typically incur to compensate commercial payments networks.
Ahead of the digital euro’s official launch in 2029, the ECB is currently working to select lenders who wish to participate in the pilot program.
As a result, merchants will save money since the fees associated with digital euro payments will be capped at a lower amount than those currently levied by multinational companies like Visa and Mastercard.
