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Members of the European Parliament (MEPs) had another awkward exchange with the European Central Bank (ECB), as factions try to agree on their position on the digital euro. 

Piero Cipollone, an ECB official, was the latest to appear at the European Parliament on Wednesday (February 14) in a bid to find agreement with lawmakers. 

However, this will be hard to come by, with Dutch MEP Paul Tang beginning his questions to Cipollone by saying: “I want to discuss the use case for the digital euro, I think that is a question that the European Parliament sometimes struggles with.”

Tang said that privacy, security and affordability are things that he would “like to think” establish a use case. 

Michiel Hoogeveen, meanwhile, who has recently successfully negotiated the Instant Payments Regulation, said that the ECB is “scared” to answer “what problem the digital euro is solving”.

The Dutch MEP said that Cipollone’s remarks “still go back to a bunch of hand waving, to be frank”.

“Maybe it is good for financial inclusion, maybe it is better for cross-border payments, maybe it is a good replacement for cash as a monetary anchor,” he jested. 

“The only argument I haven’t heard yet is, China is doing it so we should start doing it as well!”

The MEP said he “seriously still doubts” whether there is any added value from a digital euro.

The exchange between the politician and central banker got so animated that at one point Cipollone responded to the right-wing MEP with: “I don’t think you understand what I said! 69 percent of the market is in the hands of someone else. We should stop fighting amongst ourselves, and think where the real problems are.”

Speaking during an earlier debate on Wednesday, Tang said he was less than enthusiastic about “the process up until now” regarding the digital euro and legal tender regulatory proposals. 

“There have been two deadlines for the report on the digital euro, and it has not been produced,” he said. 

He criticised delays and said that the European Parliament has ended up “working against the clock, as the end of the mandate is coming”.

Tang said that there needs to be a timeline that is “doable”.

“I’m not sure why this is so difficult,” he said. “I’m not sure what is behind it, but I have to tell people outside of the European Parliament who have taken an interest in this package that I’m not sure what the European Parliament will do.”

Tang warned that he was unsure that the Parliament would “be able to deliver and perform our democratic duty”.

“I’m ready to clear my agenda and have as many meetings as is needed to come to a conclusion.”

International schemes called out

Cipollone was making his debut in front of the Economic and Monetary Affairs (ECON) committee, having replaced Fabio Panetta on the ECB’s executive board at the end of last year.

“There is currently no single European digital means of payment that is universally accepted across the entire euro area,” he said. 

Cipollone continued that this is creating a reliance “on ever more expensive international card solutions for daily payment activities”. 

“Fees applied by international card schemes almost doubled between 2016 and 2021 in the EU, and even these international card solutions cannot be used everywhere,” he said. 

Cipollone argued that a “digital euro would remedy this situation, breaking Europe’s long-held dependency and fostering competition”. 

“To this end, everyone in the euro area should be able to make or receive payments in digital euro, irrespective of their intermediary or country of origin, as is currently the case for cash.”

“My mother is 93, she cannot go to the supermarket any longer, so she has learned to order stuff online. But, she doesn’t know how to pay, you need a non-European solution for that, how fair is that?” he asked, in response to a question from Tang. 

This is a business case that the ECB should be able to solve, Cipollone said. 

“You will be flying home this weekend? You will be flying on European airlines, but if you want a coffee, guess what? You know what you have to do. You have to go round so many devices in your wallet, and we don’t have a European solution for that.”

Necessary work

Although it is no secret in Brussels that enthusiasm for a digital euro is low, there is almost a consensus among parliamentarians that the work is necessary. 

This was summarised by Gilles Boyer of the centrist Renew wing, who said that “this is a project that has to go well if it is to benefit citizens”. 

In response to a question from Boyer, the ECB official also backed the European Commission’s plans to have caps on digital euro fees, something which merchant groups have been pushing to be near to zero. 

“This is a sensible proposal, we are imposing a digital euro on merchants,” he said. 

He continued that there “is ample room” for providers to compete. 

He did, however, back away from the ECB setting any such cap, instead suggesting that the ECB could provide technical assistance. 

Stefan Berger, the rapporteur for the digital euro legislation, meanwhile, asked Cipollone about whether a digital euro should be programmable, and himself came out against the idea. 

“We never spoke about programmable money,” said the ECB official. 

Rather, Cipollone said that the ECB will “allow conditional payments”.

“This means payments that will be triggered under certain conditions,” he explained. 

Berger, a German MEP, also asked about the ECB’s timeline for the project to which Cipollone clarified that the ECB plans to finalise its work by the end of 2025, but this does not necessarily mean that it will issue a digital euro. 

“We also need to complete the rulebook. The rulebook is the rule of the game,” he added, referring to the ECB’s scheme rulebook for the digital euro, which launched in June last year.