Spanish Central Bank Executive Reviews Viability of Private Payment Amid Digital Euro
The Deputy Governor of Banco de España, Margarita Delgado, delved into the financial stability issues concerning the rosy display of the nonbank financial service providers. The executive reviewed the viability of private payment when addressing the university students concerning the digital euro.
The executive speech on Friday, August 25, acknowledged the critical input by the European Commission, particularly in expediting the digital euro legislative project. She indicated that private payment solutions would ultimately interact with the digital euro infrastructure.
Digital Euro Potential to Overcome Cross-border Payment Challenges
Delgado disclosed that the digital euro can assist the European Union in resolving multiple challenges, particularly the cross-border payment barriers. She supports the digital euro to lower the costs incurred by businesses regarding private payment service providers (PSPs). Also, the digital euro will overcome the general absence of PSPs across Europe.
Delgado opined that developing the central bank digital currencies (CBDC) and stablecoins could worsen the absence of PSPs in Europe. She suggested that Europe can avert such an outcome by introducing the digital euro.
The central bank executive suggested that the digital euro could coexist with private payment solutions. She restated the Banco de España objective in digital euro as facilitating the creation of pan-European payment. Also, the central bank anticipates the development of new financial services supported by the private sector to boost its competitiveness with non-European solutions.
Banco de España deputy governor clarified that the digital euro would not derive coverage from the usual deposit insurance. The coverage is feasible once the common supervisory and resolution authority is established within the European deposit insurance initiative. Delgado added that financial security is paramount and a priority for any country before unveiling the digital euro.
European Central Bank Hinges Digital Euro Rollout on PSPs
The European Central Bank (ECB) suggests facilitating digital euro usage is necessary within the eurozone before scaling it to other territories. Delgado observed that scaling the retail usage of the digital euro beyond the eurozone would yield opportunities for private PSPs assuming the intermediary role.
Delgado recognized the ECB Eurosystem’s current outreach obligating regulators to facilitate the payment service providers to avail digital euro to the entire population. The executive indicated that the ECB plans to obligate the PSPs to develop a digital euro physical card that the population would use in processing payments.
The Banco de España executive notes that the proposed regulation would prohibit PSPs from imposing charges on basic services. Also, the PSPs cannot compel the establishment of the contractual agreement before guaranteeing access to the digital euro within the proposed regulation.
Delgado notes that PSPs must facilitate onboarding support for vulnerable group members. In particular, the ECB Eurosystem requires PSPs to avail human interaction to guide users during onboarding and executing transactions.
Editorial credit: Irina Papoyan / Shutterstock.com
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