By Valentina Za
MILAN, Feb 19 (Reuters) – The introduction of the digital euro could cost European banks between 4 billion and 6 billion euros ($4.7 billion and $7.1 billion) spread over four years, a senior policy official at the European Central Bank said on Thursday.
Piero Cipollone, a member of the ECB’s Governing Council, also said that establishing the new digital-only central bank currency that the ECB is working on is estimated to cost around €1.3 billion.
The operating costs would then amount to around 300 million euros, he added, without specifying whether this figure refers to an annual amount.
The ECB is awaiting EU legislation to issue the digital euro, which it sees as a “way to keep public money relevant in a digital economy, unify Europe’s fragmented payments landscape and curb the role of non-EU providers to protect the bloc’s monetary sovereignty and economic security.
BANKS WILL BE ABLE TO RECOVER COSTS, SAYS CIPOLLONE
“The estimates we have prepared based on the indications we have received from the banks point to implementation costs of between 4,000 and 6,000 million (euros) in four years: that is, around 3% of what they spend each year on the maintenance of computer systems,” said Cipollone.
He was speaking to an Italian parliamentary committee on banks about the digital euro project, which he oversees under his payments remit at the ECB.
Banks will be able to cover the costs through the commissions they receive from merchants for the digital euro services they will provide.
It will be the banks that will provide users with the smartphone application necessary to pay with digital euros.
Banks, however, will not have to deduct from merchant fees the costs they normally bear to remunerate private payment networks because the ECB will not charge for the service of its network.
The ECB is currently working to select lenders who are interested in participating in the pilot phase of the digital euro before its official launch in 2029.
Merchants, in turn, will save money because there will be a limit on the fees charged for digital payments in euros and the limit will be below what international companies such as Mastercard or Visa currently charge.
(1 dollar = 0.8488 euros)
(Reporting by Valentina Za; Editing by David Holmes)