ECB Governing Council highlights potential for 'new business models' if a digital euro is introduced

No firm decision has been made on whether Europe will move forward with a digitized version of the euro. But a new statement from the European Central Bank (ECB) leadership suggests that the institution is eyeing the potential market implications of such a move.

The Governing Council is the primary decision-making body within the ECB. In a December 11 statement outlining decisions made on the monetary policy front, the Council noted the Eurosystem's ongoing movement toward a possible digital euro creation. A decision on this, as previously reported, could come as early as January.

Echoing officials like ECB chief Christine Lagarde, the statement highlights that "[t]his does not, however, imply any intention to crowd out the private sector’s role in providing payment services."

Rather, it frames it as a possible opportunity for payment services: " Moreover, supervised private intermediaries would be best placed to provide front-end solutions and ancillary services and to build new business models based on a digital euro, should such a construct be introduced."

What those business models might look like will depend on the ultimate scope and actual use of the digital euro. The ECB published a digital euro report in early October noted several important factors that would lead to such a launch, including digital currency adoption by central banks worldwide and a decline in cash use.

"A digital euro would preserve the public good that the euro provides to citizens: free access to a simple, universally accepted, risk-free and trusted means of payment. It also poses challenges, but by following appropriate strategies in the design of the digital euro the Eurosystem can address these," the ECB said at the time.