Quote from Alex bobby on September 5, 2025, 4:37 AM

ECB: Digital Euro Will Be 'Profit-Making' for Payment Service Providers

The debate over Europe’s proposed digital euro is intensifying, as the European Central Bank (ECB) continues to defend the project’s feasibility, benefits, and long-term necessity. In a recent exchange with members of the European Parliament’s economic affairs committee, Piero Cipollone, a member of the ECB’s executive board, sought to reassure lawmakers that the rollout of a retail Central Bank Digital Currency (CBDC) will not undermine financial stability and, importantly, will be “profit-making” for payment service providers.

The comments reflect growing scrutiny around the costs, risks, and benefits of a project that could reshape the way 350 million Europeans conduct everyday transactions.

Profitability and Costs in Focus

Cipollone’s reassurance was clear: the ECB does not expect the digital euro to be loss-making for banks and other payment intermediaries.

“For what we know, the taking up of the digital euro will not be so huge that it puts in danger the financial stability, but will be enough to provide a signal to the central bank to pay for the infrastructure and to compensate the major actor for the investment,” he told MEPs.

According to the European Commission, the estimated cost of integrating the digital euro across the euro area falls between €2.8 billion and €5.4 billion. While significant, these figures are far below some industry predictions, which Cipollone described as “six to ten times higher.” He questioned the credibility of such inflated numbers and argued that the ECB’s calculations are more realistic.

The ECB’s model envisions the digital euro as free to use for citizens, just like cash. To incentivise banks and service providers to distribute and support it, the Eurosystem is developing a compensation mechanism. This would cover operational costs while ensuring a level playing field between public and private actors.

Legislative Gridlock

Despite the ECB’s reassurances, progress at the political level has been slow. The European Parliament has yet to reach consensus on the legislative framework needed for the digital euro’s launch.

Since the European Commission tabled its proposal in June 2023, Parliament’s economic committee has held several rounds of exchanges. But momentum has stalled. Former rapporteur Stefan Berger (EPP, Germany) presented a draft report in February 2024, yet no vote has been taken. Berger later stepped down in December 2024, leaving Spain’s EPP MEP Fernando Navarrete as the new lead.

Navarrete has been openly skeptical. In a 27-page paper titled “Do we really need the digital euro: a solution to what problem exactly?”, he questioned the rationale for a retail CBDC. He argued that Europe’s reliance on Visa, Mastercard, and other non-European providers is a concern, but the digital euro may not be the right fix. Instead, he suggested that the ECB should explore a wholesale CBDC to strengthen interbank payments, while evolving its role into that of a neutral enabler rather than a dominant player.

Navarrete pointed out that many leading economies, from the U.S. to Japan, have slowed or abandoned retail CBDC plans, citing risks to financial stability, low consumer demand, and unclear cost-benefit outcomes.

Why the ECB Believes It’s Urgent

For the ECB, however, the argument for a digital euro hinges less on today’s needs and more on tomorrow’s vulnerabilities. Cash usage in the euro area has dropped sharply in just five years: from 68% to 40% off all transactions, and from 40% to only 24% of transaction value.

Cipollone warned that without a digital backup, Europe risks losing a vital pillar of monetary sovereignty.

“Today cash is our only true fallback, but as society increasingly moves away from cash, we need to complement it with a digital version,” he told lawmakers. A digital euro, he argued, could serve as a safety net during crises, ensuring reliable public payment infrastructure if private systems fail due to cyberattacks, natural disasters, or geopolitical disruptions.

“Payment services are not a luxury — they’re as essential as electricity or clean water for the daily life of our citizens,” Cipollone added.

Challenges Ahead

Despite the ECB’s defence, several sticking points remain.

1. Privacy Concerns – Citizens and governments alike demand that a digital euro guarantee robust data protection. Many fear surveillance or central bank overreach.
2. Bank Compensation – Ensuring a fair distribution model that does not disincentivize banks or burden taxpayers is a delicate balancing act.
3. Cross-Border Impact – Non-euro countries within the EU and beyond worry about spillover effects if their citizens adopt or hoard digital euros.
4. Holding Limits – Policymakers are divided over whether citizens should face caps on how many digital euros they can hold, to avoid destabilising deposits in commercial banks.
5. Governance – Who will ultimately decide if the project goes ahead — the ECB, the European Parliament, or national governments — remains a contentious issue.

Finance ministers across the bloc are currently debating these issues, with Denmark’s EU presidency pushing for a common position by the end of 2025.

The Bigger Picture

The debate over the digital euro mirrors global uncertainty around CBDCs. While more than 100 central banks worldwide are exploring the idea, only a handful have launched retail versions — notably the Bahamas and Nigeria. The world’s largest economies are treading carefully, wary of undermining existing financial systems.

For Europe, the stakes are particularly high. The digital euro is not just about payments; it is about strategic autonomy, reducing dependence on foreign providers, and preparing for an increasingly digital economy.

Looking Forward

The path toward a digital euro remains uncertain, but momentum is building. With EU finance ministers aiming for a common position by the end of 2025, the coming months will be decisive. Success will depend on resolving core challenges: ensuring robust privacy protections, creating a fair compensation model for banks, and convincing citizens of the digital euro’s value.

If Europe manages to strike the right balance, the digital euro could become more than just a payment tool—it could serve as a safeguard for monetary sovereignty and financial stability in a rapidly digitising world. But if skepticism prevails, the project risks stalling, leaving the euro area dependent on private and foreign payment infrastructures.

Final Thought

The digital euro could become a cornerstone of Europe’s financial future, or it could remain a costly experiment that never sees the light of day. What happens next will depend not only on technical readiness but also on political will, citizen trust, and the ability to strike a balance between public good and private profit.

Conclusion

The ECB insists the digital euro can be rolled out at a manageable cost, with profitability built in for service providers and minimal disruption to financial stability. But skepticism remains strong, particularly in Parliament, where lawmakers like Fernando Navarrete question whether the project addresses the right problems.

For now, the digital euro remains in its preparation phase, with political, technical, and social hurdles to clear before any launch. The debate underscores the tension between innovation and caution: whether Europe should lead the way in public digital money or wait until others prove it works.

Meta Description:
The ECB says the digital euro will be “profit-making” for payment providers, with rollout costs estimated at €2.8–€5.4 billion. As lawmakers debate privacy, bank compensation, and financial stability, the project’s future remains uncertain.