Financial institutions throughout Europe are looking at substantial implementation expenses as the continent prepares to launch its digital euro currency, according to new cost projections from European Central Bank leadership.
Speaking to Italian lawmakers on Thursday, ECB Governing Council member Piero Cipollone revealed that banking sector expenses for rolling out the digital currency are projected to range from 4 billion to 6 billion euros, equivalent to $4.7 billion to $7.1 billion, distributed across a four-year timeframe.
The central bank itself anticipates spending approximately 1.3 billion euros on establishing the digital payment infrastructure, with ongoing operational expenses estimated at around 300 million euros, though Cipollone did not clarify whether this represents yearly costs.
European monetary authorities are currently waiting for legislative approval from the European Union to move forward with the digital euro initiative. Officials view this electronic currency as essential for maintaining public money’s relevance in an increasingly digital marketplace, creating unity across Europe’s currently divided payment systems, and reducing reliance on payment companies based outside the EU to safeguard the region’s financial independence.
“Estimates we’ve come up with based on indications we received from banks point to implementation costs of between 4 and 6 billion (euros) over four years: that is about 3% of what they spend every year on IT-system maintenance,” Cipollone explained during his testimony to the Italian parliamentary banking committee.
Cipollone, who leads the digital euro initiative as part of his payments responsibilities at the ECB, indicated that financial institutions will have opportunities to recover their investment costs through merchant fees collected for digital euro services.
Under the planned system, banks will distribute smartphone applications that consumers will use to make digital euro transactions. However, these institutions will benefit from not having to pay the typical fees to private payment networks, since the ECB will provide its network services without charge.
The central bank is currently in the process of identifying financial institutions interested in participating in trial runs of the digital euro before its scheduled 2029 official debut.
Business owners are expected to see savings under the new system, as digital euro transaction fees will be subject to caps set below current rates charged by major international payment companies like Mastercard and Visa.
