What is the 'digital euro'?
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What is the main topic discussed in this episode?
Breakfast Business with Enterprise Ireland on Newstalk. The proposed digital euro gives spending power for those without banks and to have a currency which can bypass the giant American card companies such as Visa and American Express. It's only an idea at the moment, but we could all be spending digital euros before the end of the decade. But do we need it? Atza Faz is a payments advisor with Eurocommerce, which represents Europe's retailers and is on the line. Good morning, Atza.
What is the digital euro and how does it differ from physical cash?
Good morning. Thanks for having me. Can you explain to us what the digital euro is?
Well, in its simplest form, it's the digital form of our current physical cash. It's issued by the central bank, so it's public good. And it's, in essence, a way for citizens to pay online and in-store digitally rather than with physical cash.
Will banks be bypassed by the digital euro or still play a role?
And banks can be bypassed?
Well, not banks. So the banks will have a crucial role in the distribution and the, let's say, processing of these two euros that are accepted with retailers. But what will be bypassed or not needed are what you mentioned in the intro, the likes of Visa and MasterCard. And it's not to say that we won't need Visa and MasterCard anymore. I think they have a... great products and a role to play but you know there's a different tool for a different job and for some of those jobs the digital euro will be right okay and who who creates the digital euro and who administers it So it will be created like cash by the European Central Bank, the euro system, as they call it.
Who will create and administer the digital euro ledger and distribution?
So they are the issuer, if you will. And it will be distributed by what they call intermediaries, which is a word for banks and payment service. And so in the back end, like with the settlement system that the central bank operates for credit transfers, is the European Central Bank who has the ledger, if you will, of all the digital euros.
And they will have to obviously monitor that it's not abused and it's not stolen and all that. What uses will the digital euro have? What's the concrete benefit that consumers could see if and when the digital euro is introduced?
Well, I think there's about three. So one of them is it's likely to be at lower cost and it will translate in lower consumer prices. I think an important element to mention is that it is, you know, the data stays in Europe. In the case of American visa transactions, they are American companies. If bad things happen, U.S. authorities will have or can gain access to those transaction data.
What concrete benefits could consumers see from a digital euro?
But the euro will be quite anonymous. You know, the European Central Bank is not interested whether Adsefaz buys a hamburger every week, which I don't, by the way. But there's a level of, let's say, anonymization, aggregation. Of course, the central bank needs to know which money goes where, make those settlements, but they're not interested in individual transactions.
I presume this all costs money. Who will end up paying for this? I mean, the establishment of it will be covered, I'm guessing, by the ECB. But the day-to-day administering of the digital euro and the maintaining of the wallets, that all costs money and the banks won't want to pay that.
Well, true. And, you know, unfortunately, we have let consumers believe that payments are for free in the last couple of decades. However, payments cost money. But it's our belief. And actually, we need the digital euro to be cheaper, you know, in terms of cost than any other digital payment method. Now, of course, the introduction of it will cost some money. You hear varying amounts. Some say, like the European Central Bank, it's something like 1.5 billion euro introduction cost and running cost. Other studies are going as high as something like 18 billion. And our point would be, you know, in the overall scheme of things, if you look at the defense of Europe, if we are prepared to spend 800 billion on a rearm Europe,
How much will introducing and running a digital euro cost and who pays?
or 800 billion on making Europe more competitive. Even if it were 18 billion euro to introduce digital euro, it's a line of defense. It's peanuts, relatively speaking.
And Eurocommerce represents retailers throughout the continent.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:01–0:34
2
What is the digital euro and how does it differ from physical cash?
0:34–1:03
3
Will banks be bypassed by the digital euro or still play a role?
1:03–1:50
4
Who will create and administer the digital euro ledger and distribution?
1:50–3:01
5
What concrete benefits could consumers see from a digital euro?
3:01–4:33
6
How much will introducing and running a digital euro cost and who pays?
4:33–5:55
7
Do retailers and merchants want a digital euro and why is resilience important?
5:55–7:17
8
What is the realistic timeline for the digital euro becoming available?
7:17–7:35