Digital euro operations in Spain may see greater private inclusion: central bank

As the digital euro inches forward, Spain’s central bank deputy governor Margarita Delgado has hinted at increased collaboration with the private sector to speed up adoption levels.

Delgado disclosed to attendees at the CEV Conference in Pamplona, speaking on various issues concerning an EU-based central bank digital currency (CBDC). According to the central bank executive, EU authorities are pushing for private payment service providers (PSPs) to spearhead the retail side of things for the digital euro.

“We believe there is enough space for a digital euro and private payment solutions to co-exist,” Delgado said. “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 told attendees that the European Central Bank (ECB) has written to EU legislators to amend existing rules to allow private PSPs to interact with the proposed digital euro in a third-party role. Under the amended regulations, PSPs will be allowed to offer digital euro payment cards to customers while prospects for offerings outside the eurozone appear promising.

“It has also called on regulators to act in order to require payment service providers to make the digital euro available to the broad population,” Delgado added.

Commercial banks in the EU are also seeking improved roles in the rolling out of a CBDC to mitigate the risks of bank disintermediation stemming from the widespread use of the digital euro.

Despite the optimism, there are several prerequisites that private PSPs must meet before they can offer digital euro services to their users. The ECB wants guardrails in place to mandate PSPs to provide full-scale onboarding support to vulnerable demographics through human interactions.

Furthermore, PSPs will not be allowed to charge fees or mandate users sign a contractual agreement before providing CBDC services to users.

In July, the European Commission published a draft bill for the digital euro to guide the operations of the CBDC. Right off the bat, the commission seeks to preserve the role of cash as a payment mechanism in the region while emphasizing offline payments for improved privacy.

Privacy and stability before launch

Following the public consultation reports, the ECB noted that privacy concerns ranked high for industry stakeholders. Going forward, the ECB says it will ensure that the private data of users take center stage for the duration of the digital euro pilot.

Regarding the issue of a common deposit insurance scheme for the digital euro, Delgado revealed that the ECB is awaiting the establishment of a supervisory and resolution authority before proceeding on the matter. Barring any sudden changes, pundits expect a full-scale launch for the digital euro before the end of 2027.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

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