The planned introduction of the digital euro could prove too expensive and place a huge financial burden on European banks. A new study shows that the expected costs for a total of 19 European financial institutions could exceed two billion euros. For the entire eurozone, costs between 18 and 30 billion euros are outlined. This conclusion was reached by the consulting company PricewaterhouseCoopers (PwC), to which the European Credit Sector Associations (ECSA) commissioned the study, writes the German public media ARD.
Costs for new infrastructure and ATMs
What are the factors that, according to PwC, could increase the costs of introducing the electronic payment instrument? Adapting mobile banking applications and e-banking platforms, physical payment cards, retail payment terminals and ATM infrastructure.
The change to ATMs alone will cost an average of nine million euros per bank, the publication also says. PwC experts also emphasize that the introduction of the digital euro could involve up to half of the available qualified personnel for years. This, in turn, could block innovation in the field of payment transactions.
Criticism and concerns from banks
Many banks and savings banks in Germany are skeptical about the digital euro. They doubt how much concrete and additional benefits there will be compared to existing payment methods - for example, real-time transfers. German banking institutions are concerned about the additional costs and complexity of the entire operation.
An additional risk associated with the introduction of the digital euro could arise in times of crisis - if citizens massively start transferring their bank deposits in digital money to the central bank. This would threaten the liquidity of commercial banks. Therefore, the introduction of upper limits for digital euro availability is being discussed, the ARD also points out.
Why do we need a digital euro?
Why does the European Central Bank (ECB) want to introduce a digital euro at all? The main goal is to reduce dependence on American payment service providers such as Visa, Mastercard and PayPal and to strengthen Europe's strategic autonomy in the field of payment transactions.
The digital euro is intended to serve as a complement to cash and offer a secure, free and uniform option for digital payments throughout Europe. In addition, the digital euro will improve the protection of personal data, as the ECB will not collect and monitor this type of data, as American payment system providers do.
What next?
The digital euro is currently in a preparatory phase, which began in November 2023 and should be completed by the end of 2025. By then, all technical tests must be completed and the design of the new payment instrument ready. The ECB's Governing Council will decide on the actual introduction of the digital euro at the earliest in 2026.
If the Council does indeed give its approval, the further introduction of the electronic payment instrument will depend above all on the acceptance of citizens, retailers and banks. The ECB explicitly emphasizes that the digital euro will not abolish cash, but only supplement it, explains the German public media ARD.