The Digital Euro Conference in Brussels was a high-level event that provided a stage to international policymakers, lawyers, financial tycoons, journalists, and even a few crypto enthusiasts. The discussions were focused around the creation of a legislative framework for a digital Euro, a strategic central bank digital currency (CBDC) that has the potential to reshape Europe's economy.
The conference was attended by a number of key political figures, including the Executive Vice President of the European Commission, the President of the European Central Bank, the President of the Eurogroup, the Chair of the European Parliament's ECON Committee, the Minister of Finance of Germany, an Executive Board Member of the European Central Bank, the President of the European Banking Federation, and the Executive Chair of the Santander Group, among others.
It was an honour to have in attendance the Queen consort of the Netherlands, Her Majesty, Queen Maxima Zorreguieta Cerruti who has served as the UN Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA) since 2009. As Special Advocate, she is a leading global voice on advancing universal access to and responsible usage of affordable, effective and safe financial services. An important focus of her work is on enabling reliable technology for financial inclusion in support of the Sustainable Development Goals (SDGs).
Her Majesty, Queen Maxima of the Netherlands in her keynote address shared that:
“1 in 5 adults have not made any digital merchant payment, this includes not using a card to purchase things in a store… 2 in 5 adults have not received a digital payment of any kind nor bought something online…1 in 4 people cannot come up with emergency funds to cover shock events within 30 days.”
Having a well-designed CBDC can address such challenges and improve financial inclusion. CBDCs can be a cheap and effective way for central bank money integration into the economy and help with existing payment systems receive a long-needed update.
According to her Majesty, Queen Maxima, “implementation of any CBDC should be accompanied by policy reforms and safeguards to address some difficulties and risks including overcoming low level and financial digital literacy and operational challenges including cyber security.”
Valdis Dombrovskis, Executive Vice President of the European Commission, stated in his opening remarks that having a digital euro will not only establish a much more efficient means of payment, but will also bring massive additional benefits such as money programmability.
Christine Lagarde, President of the European Central Bank, explained in her keynote address that issuing a Digital Euro will give Europeans confidence since large payment transactions are currently handled by companies outside the EU. Furthermore, approximately 50% of Europeans already prefer to pay digitally. The Digital Euro project will be built on EU infrastructure, bolstering the EU's autonomy strategy.
The Digital Euro will have cash-like features, offline payments that facilitate network effects, and the ability to pay anywhere, in stores or online. According to Ms. Lagarde, the right balance between privacy and illegal activities prevention must be found since according to the lates data, 43% of users value privacy highly.
The biggest challenge, according to Paschal Donohoe, President Eurogroup, and Irene Tinagli, Chair of ECON Committee, European Parliament, is understanding the technical aspects of the Digital Euro. The infrastructure must be able to support a high volume of low value transactions. Although the European Central Bank (ECB) is an important institution in making investment decisions, it may not be the right one to develop and support such a technically challenging endeavor as a CBDC.
The first panel discussion focused on the challenges and opportunities for the financial sector, with participants including the European Commission's Executive Vice President; Christian Linder, Germany's Minister of Finance; Fabio Panetta, Executive Board Member of the European Central Bank; Ana Botin, President of the European Banking Federation and Executive Chair of Santander Group; and Gilles Grapinet, CEO Worldline.
I asked a question about enabling access to the Digital Euro by other, less-developed countries. According to the panel participants, Europe has an open economy. Since the Digital Euro will be an alternative option for retail payments, foreigners could invest their savings in it and that could negatively disrupt their foreign banking system. The Digital Euro means stability and stability requires survival, especially in a heavily competitive ecosystem with 250 payment methods worldwide (Europe covers 150 of those). It's survival of the fittest.
A well-developed payment system with high interoperability and speed must enable instant payment, potentially incorporating p2p functionalities like other digital currencies. Aside from the Know Your Customers (KYC) and Anti-Money Laundering (AML) that can be handled by the ECB, branding and marketing of the Digital Euro are important - a well-regulated asset and payment system that people can easily adopt.
During a panel discussion with Thierry Breton, Commissioner for the Internal Market; Eva Kaili, Vice-President, European Parliament; James von Moltke, President and CFO, Deutsche Bank; John Calian, CEO, Riddle & Code; Margherita Della Valle, Group CFO, Vodafone it was mentioned that with the rapid growth of blockchain technology, there’s a massive economic growth opportunity that can be attained through the establishment of digital infrastructure and connectivity. According to the panelists, EU countries should improve their metrics on software education by expanding the infrastructure and incentives required to train software talent.
I hope you enjoyed my short report on the event. In essence, there’s a whole lot more work to be done on the Digital Euro, especially in terms of perception by Europeans.
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