In her presentation at Money20/20, Evelien Witlox, Digital Euro Director at the European Central Bank, delved into the potential implications of a digital euro and how its inception would impact the Euro payment landscape.
Decreasing Cash Usage and the Rise of Digital Payments
Noting a decrease in cash usage across Europe, Witlox expressed the sentiment that a digital euro could be in the works.
“I think there is a certainly high likelihood we also invest in the digital euro, but it’s not inevitable at the moment”, Witlox said.
Witlox highlighted the European Central Bank’s intention to proceed cautiously, even as pressure mounts from the decline in cash usage and the emergence of alternative currencies and digital payments.
“We’re here in Amsterdam, and only one in five transactions are done by cash, with all the other transactions being digital”, Witlox said.
Potential Benefits for Everyday Transactions
The ECB is exploring the introduction of a digital euro, which would function as an electronic version of physical cash. Them would become legal tender if issued, allowing the general public to use central bank money for everyday transactions.
This would be a potential benefit for citizens, as merchants offering digital forms of payment would be required to accept them, Witlox said.
Security and Privacy
The push towards the digital euro has been partly motivated by fears that Europe’s dependence on payment services outside the region will undermine economic independence and the security of payments, both private and public.
Witlox expressed concern about Europe’s dependence on non-European payment systems and suggested them a bolsters economic sovereignty and ensures data security.
“Digital inclusion is crucial. The digital euro will be designed to ensure everyone can participate in the digital economy,” said Witlox.
Witlox also stated that the ECB has no desire to monitor user and client transactions, emphasizing that privacy and security were top priorities. These concerns would be addressed through technical solutions such as ‘privacy by design’ and offline digital euros. The ECB has no plans to create programmable money.
“We have included privacy by design,” Witlox said. “Transactions will flow through the ECB’s system central bank.”
