Global: Spanish Central Bank Official Explores Coexistence of Digital Euro and Private Payment Services

Margarita Delgado, Deputy Governor of the Bank of Spain, engaged with university students and audiences in Pamplona on August 25, delving into the implications of the digital euro’s introduction as proposed by the European Commission’s legislative plan. She discussed at length how private payment solutions would interact with the digital euro and its infrastructure.

The digital euro is positioned to address challenges faced by the European Union, including hurdles related to cross-border payments, costs for businesses associated with private payment service providers (PSPs), and the scarcity of PSPs across Europe. The rise of central bank digital currencies and stablecoins in other regions could exacerbate the latter issue, making the digital euro’s introduction pivotal. Delgado expressed:

“We believe there is enough space for a digital euro and private payment solutions to co-exist. […] In fact, our expectation is that the digital euro enables the development of new pan-European payment and financial services by the private sector, making it easier to compete with non-European solutions.”

Delgado emphasized that before launching the digital euro, careful consideration of financial security is paramount, especially concerning its coverage by common deposit insurance, contingent on the establishment of a common supervisory and resolution authority under the European deposit insurance scheme.

The European Central Bank (ECB) envisions the digital euro’s initial rollout within the eurozone before expanding its scope. The retail utilization of the digital euro beyond the eurozone could open up fresh avenues for private PSPs to act as intermediaries, Delgado pointed out.

The ECB has also outlined its regulatory expectations for PSPs. Delgado noted:

Continuamos con la tradicional mesa redonda sobre política monetaria con Margarita Delgado, subgobernadora del Banco de España, @burkhardbalz, miembro del Comité Ejecutivo del BundesBank, Ángel Nigorra, director general de Bizum España, y @PabloZalba, comisario de los CEV. pic.twitter.com/Q05tFeaK17

— Equipo Europa (@Equipo_Europa) August 25, 2023

“The ECB Eurosystem has also called on regulators to act in order to require payment service providers to make the digital euro available to the broad population.”

The ECB intends to mandate that PSPs offer a physical payment card for the digital euro as well.

As per the proposed regulations, PSPs will be prohibited from levying fees for basic services or demanding contractual agreements prior to granting access to the digital euro. Additionally, they will be obliged to provide onboarding assistance for vulnerable groups, including the provision of human interaction to guide users through onboarding and transaction processes.