The European Central Bank (ECB) has emphasized the need for a digital euro to ensure availability during major disruptions. The plan involves building a distributed transaction infrastructure isolated from faults across multiple regions.
The ECB revealed that the digital euro needs to guarantee continuous payment access across the euro area even during major disruptions such as banking crises, cyberattacks, and power outages. Piero Cipollone, the ECB’s board member, presented the proposal to the European Parliament, acknowledging that the digital euro would complement cash, therefore ensuring a secure, universally accepted digital payment method is necessary.
ECB emphasizes digital euro position
According to Piero Cipollone, digital payments have become increasingly common daily but are vulnerable to geopolitical risks, operational failures, and cyberattacks. He noted incidents such as the sabotaged undersea cables in the Gulf of Finland and power outages in Spain and Portugal, showing the need for resilient systems. He, however, insisted that the digital euro would provide an extra layer of security and stability in such scenarios.
In a proposal submitted to the European Parliament, the ECB’s plan for the digital euro includes a distributed transaction infrastructure with servers in at least three isolated regions to ensure uninterrupted service availability. The digital euro app will be backed by the ECB and allow users to switch through several payment providers, guaranteeing continuous access to funds in the event of cyberattacks or disruptions to individual banks. The app will also be incorporated with an offline feature that allows for payments even when internet connectivity is disrupted.
Cipollone mentioned that financial inclusion is another key component that the euro would ensure access for digitally excluded citizens with limited financial literacy or who face physical impairments. The ECB has also conducted user research, including user groups with vulnerable and digitally excluded consumers, to design adaptive interfaces such as voice commands, large font displays, and simplified workflows.
The ECB proposal highlighted that national entities such as post offices, libraries, and local authorities may provide dedicated customer support to assist citizens in accessing digital services.
Despite the provisions highlighted in the ECB proposal, some lawmakers have expressed concerns, citing that risk-free digital accounts could drain deposits from commercial risks. They raised questions regarding the individual accounts with caps on them and whether those caps would be lifted during a crisis. ECB responded that caps would be determined via a thorough analysis. ECB added that savvy individuals may move funds using U.S.-backed stablecoins in emergencies.
Lawmakers raise concerns over privacy and competition over the digital euro
Some lawmakers also highlighted the privacy and potential displacement of private sector payment solutions issue. Cipollone said that open standards for the digital euro could allow private entities to develop sophisticated services. He added that banks distributing the digital euro would also be compensated for their services.
The ECB reiterated that digital currency is intended to strengthen the resilience of the European payment system and is not intended to replace cash. Some ECB officials highlighted recent international developments, such as the passage of the GENIUS Act in the U.S., that showed the need for a robust European digital currency.
Cryptopolitan reported that major U.S. banking groups, including the Pank Policy Institute (BPI) and American Bankers Association, urged Congress to tighten the GENIUS Act to prevent stablecoin issuers from offering interest-like returns. They warned that without stricter rules, close to $6.6 trillion may be shifted from traditional deposits to stablecoins, potentially reducing the lending market and raising interest rates.
The GENIUS Act currently prevents issuers from paying interest, but banks argue the law does not fully cover crypto exchanges, which may create a loophole for proxy yield offerings. They cited stablecoins such as USDC and USDT, which continue to provide interest rewards through exchanges, a practice they say unfairly competes against deposits and money market funds.
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