The agency, which has over 3,500 member banks, shared its vision for Europe’s digital ecosystem while emphasizing the role of the private sector.
The European Banking Federation (EBF), which describes itself as the voice of Europe’s banking industry, has shown support for a digital Euro in a newly published paper. The document also makes a few suggestions on how it should operate.
The paper, published on March 28th, analyzed the digital Euro’s privacy and stability. These are the two most crucial points that commercial banks care about. It also highlights the role the private sector will play in the success of a digital Euro.
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According to the EBF, infrastructure will be one of the most crucial roles of the private sector. It notes that banks would be essential in bringing a digital Euro to the masses. Consequently, they need to have a deeper involvement in its development.
EBF envisions a digital euro ecosystem with three elements. These are the retail central bank digital currency (CBDC), a wholesale CBDC issued by the central bank, and bank-issued tokens.
The retail CBDC would operate on a scheme with three levels. These are the European Central Bank (ECB), Industry Level A, and Industry Level B.
ECB will issue and maintain the digital Euro. Industry Level A will set payment rules and manage interoperability. The private sector will manage innovative solutions and value addition at Level B.
The ECB emphasized that a wholesale CBDC would be important for interbank transfers. Additionally, it would also strengthen the EU’s strategic autonomy.
According to the paper, there is also a need for central banks to work on CBDC interoperability. It noted that the current system of cross-border payment is complex and slow. Working on common standards could reduce this friction.
In other EU-related news, European Union lawmakers have introduced draft legislation combating money laundering and terrorist financing by imposing a 1,000 euro ($1,083) limit on anonymous cryptocurrency transfers.
