Firstly, I have to say , I didn’t even realise that Digital EURO is very close to be rolled out. Kind of ignorance on my part. Anyhow
I thought that Digital currency is nothing different than what we already use because most of us already use online payments. But now I realised that Digital currency is not the same thing as online bank account. Digital Euro in digital wallet would be like having physical cash in physical wallet.
I know there is some sort of concern about privacy as well. But I would like to keep it aside because this project would be optional and not replacing cash anyways.
Just wanted to ask if the changes it would bring are following
You can simply have a digital wallet on your phone and have Digital Euro in it. This doesn’t need a bank account
when you transfer from one peer to another, there is no need for intermediary as it’s almost akin to giving cash to your friend F2F
The digital payments made via Digital Euro would not need payment processors like Visa/mastercard because again this money is not coming from bank to bank, it’s wallet to wallet
Payments within Eurozone will be instant
In summary -: we can imagine a scenario where all our uninvested cash is in Digital Euro wallet and not in our bank account. And all payment made via digital Euro will not need visa/mastercard and hence would be independent from foreign providers.
Personally I like that EU has been able to develop such a solution. It is needed because we see there is a market for Stablecoins, so why not Digital Euro. But more important is the topic of having regional payments network and not depend on Visa et al.
Questions
I was wondering, this is great for individuals. But what about banks, if people switch to digital Euro , wouldn’t it reduce bank deposits ? How is EU thinking about it?
Would digital Euro be equivalent to EURC (Circle Stablecoin) typically used on crypto exchanges? For example would people be able to buy whatever crypto they want using Digital Euro?
does anyone know what blockchain is Digital Euro running on? I think it’s not Ethereum but not sure which one it actually is.
Investment related question -: are current bank stocks under pressure due to this? And which companies would benefit if Digital Euro became a success ?
Since there is this trend of Stablecoins (for whatever reason), I believe EU wants to avoid that private companies launch a lot of Stablecoins backed by US treasury in EU market which is not good for EUR stability. Is this correct assumption?
Seems US decided to let Stablecoins do this job. China decided for govt to build one. What’s the plan for Switzerland? Digital Franc?
First of all TWINT is payment system. Digital EURO is also a currency.
Twint is used to move money from one bank account to another bank account. If I don’t have a bank Account/ credit card , I cannot use Twint. In addition merchant payments via Twint are not necessarily cheap for vendors.
Digital Euro is to move Euros from one person to another. It’s more of a new way of using cash. Don’t know what the fees for such payments would be. I heard it’s going to be free.
As far as I understand, there is a trend for people to use less cash and more digital way of payments using credit cards, debit cards, epayments. But all of them need intermediaries. Cash doesn’t need any intermediary.
EU is thinking that if world wants to move completely to digital payments anyways, they would like to provide them an option which doesn’t need bank accounts, foreign processing companies etc. So more of digital cash.
This is not meant to store value and replace bank deposit, it also won’t have interests. I assume most people would link it to their bank accounts similar to twint.
See link above. This isn’t a full narrow banking solution.
It’s unrelated to crypto, whatever crypto exchange decide to use as onramp would work.
I don’t think they decided yet? (even between centralized and distributed)
It’s unrelated to US treasury (a EUR stablecoin will use EUR deposit-like assets to back it). Central banks need to be able to keep levers on monetary policy (interest rate to control inflation, ensuring companies have access to loans/liquidity/etc.), narrow banking, stablecoin, etc are endangering this.
I think you’ll still have bank account and most people will just have their bank accounts linked with their digital euro so they don’t need to manually move stuff around all the time.
It does disintermediate all the payment processors and the twint-like apps (which is a pain for EUR since every country tends to have a p2p payment system, similar to twint/revolut/etc having a universal way for quick exchange of money with no fee would be a big boost for the eurozone)
A company like worldline is probably more exposed to this compared to banks (people will still need to get loans, to invest money, etc.)
Apparently SNB plan (if it hasn’t changed) is wholesale CBDC (so use digital currency for financial actors) and no change for retail (instead working on improving things like instant payment).
(Which might make sense since CHF is a single country currency so we don’t have the fragmentation problem that the EU has, twint probably has 90% market penetration)
So this isn’t clear to me.
If Digital Euro is also going to be on blockchain. Why isn’t it called crypto?
Are there specific conditions for a blockchain to be called crypto vs not?
Maybe you mean that value of Digital Euro is not depending on crypto exchanges. And hence it’s not a digital commodity (like BTC, ETH etc) it’s a digital currency
But digital Euro should be very similar to EURC. Isn’t it?
Not free for merchant but should still be cheaper than existing payment offering as the goal isn’t to make any profit from it (and most merchant would still go through a payment processor but there might be more competition).
Quoting wikipedia (don’t know a better definition):
A cryptocurrency (colloquially crypto ) is a digital currency designed to work through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it
Careful with highly politized and polished answers bordering on misinformation.
There are a few revisits of the FAQs, here is the first paper I found.
When governments are looking for ways to finance war, energy transformation or an unsustainable social system, more control over people’s money is a welcome feature.
There are several steps Europe has and is taking towards a dystopian future: wealth inventory, mandatory acceptance of digital euro (today, merchants are not required to accept cash), programmable money (with the power e.g. to prohibit social welfare recipients from purchasing alcohol), replacing market-oriented banks with central authority e.g. to give credit. Just think of what China is doing with social rating in connection with digital money and you can imagine what European politicians might do with such a tool a few years down the line.
As far as I can tell there is neither any legislation passed about this, nor any specification, or actually any kind of detailed technical documentation. There’s just a bunch of vague web pages with promises about all the things it’ll do once implemented, but not even a basic technical feasibility study on whether those requirements could be met and at what cost.
There is no way they’re rolling it out this decade.
Thanks for the paper (which doesn’t really support those arguments, it’s more about the technical solutions).
I personally don’t buy into those slippery slope arguments. Ignoring the fact that given the lack of technical detail and published timeline makes it unlikely to roll out soon, there really isn’t much supporting the kind of citizen control you envision. (It’s not even likely to replace credit cards fully, and it’s definitely not designed/meant to replace a bank account and take a big part in financial system besides an alternative for payments)
To me this sounds like a very suspicious view of the world. If govt wants, they can already freeze all of your accounts. They don’t need digital Euro to do that.
Europe needs a local technical alternate for digital future and I don’t think there is anything wrong here.
Having a digital Euro is going to be mainly useful and voluntary. For people who are worried of govt taking control, the old method of stashing things in mattress or the new digital way of crypto world is always available.
I saw a survey from NL. 67% people would like to use Digital Euro.
To be fair I’m not quite sure it’s a CBDC, to me it’s purely a payment system (not a store of value). And probably a good idea given 1) the US duopoly Visa/Mastercard (and the few countries that don’t have widespread availability for those network like Germany) 2) the fragmentation of p2p payments across eurozone.
Having a universally accepted eurozone-wide payment system, free for users and with low merchant fee would be quite an achievement.
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