Bundesbank details economic benefits of digital euro

The digitalization of payments is progressing, but Europe primarily benefits non-European payment service providers due to fragmented national systems.

The digital euro will establish a unified, central bank-operated infrastructure across the eurozone, significantly reducing dependence on external providers, their high fees, and risks from technical or geopolitical disruptions.

Businesses, particularly those operating across multiple euro area countries, stand to gain the most from cost savings.

A Bundesbank study indicates that international debit and credit cards incur higher merchant fees than domestic options or cash.

The digital euro will eliminate scheme, license, and network fees, making the European market more attractive.

Furthermore, it will enable payments without an internet connection, ensuring business continuity during outages.

The digital euro will reinforce the central role of European banks and payment service providers, ensuring they remain primary contact points for end-users.

A clear regulatory framework guarantees fair compensation for banks, with the Eurosystem providing its infrastructure free of charge.

This enables banks to develop innovative, revenue-generating services.

A key innovation is 'conditional payments,' which execute automatically upon predefined criteria, such as payment only after package delivery or reduced train fares for delays.

These underlying technologies, including smart contracts and distributed ledger technology, also hold significant potential for future business-to-business payments and autonomous supply chains, streamlining complex agreements and reducing costs.