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ECB Digital Euro Could Boost Bank Profits and Strengthen Europe’s Payment System

Prime Highlights:

  • The ECB says the digital euro could be profitable for banks and payment providers.
  • A digital euro would act as a reliable safety net during crises, ensuring payment continuity.

Key Facts:

  • Rolling out the digital euro across the euro area is estimated to cost €2.8–€5.4 billion.
  • Cash payments in the euro area have dropped from 68% to 40% in volume over the past five years.

Key Background:

The European Central Bank (ECB) has indicated that the proposed digital euro could be a profit-making venture for payment service providers, easing concerns about potential losses. Piero Cipollone, member of the ECB’s executive board, reassured members of the European Parliament’s economic affairs committee on Thursday in Brussels, stating that the project is designed to be financially sustainable.

Cipollone emphasized that the adoption of a digital euro would not be so large as to threaten financial stability but would generate enough activity to cover infrastructure costs and compensate major participants for their investments. The EU Commission estimates the digital euro rollout would cost €2.8–€5.4 billion, which Cipollone says is reasonable.

The ECB sees a central bank digital currency (CBDC) as a retail currency that supplements cash, which will be more useful to citizens as the use of cash reduces. Cipollone stated that a digital euro would act as a safety net when there is a crisis, in case payments stop when the private systems collapse.

The project still faces some challenges. Member states and the European Parliament need to agree on the rules before it can launch. EU finance ministers are deliberating on the plan, with the Danish presidency seeking to have a unanimous stand by the end of 2025.

Some experts, like Spain’s MEP Fernando Navarrete, have questioned whether a retail digital euro is necessary. He says that a wholesale CBDC would be a more practical solution, but also retain the ECB as a neutral provider.

The ECB strategy is a significant move toward the advancement of the European payment system. By offering a secure and widely used digital currency, the euro area aims to protect financial stability, encourage innovation, and ensure citizens can confidently participate in the digital economy.