Digital Euro: Banks, Pay Attention Now and Ready the AI
The digital euro will be perfect for AI innovation!
Banks should start paying attention to the digital euro, which could launch in 2028, and get their AI teams working on it now!
Yesterday, I wrote that banks would not benefit greatly from AI in their payment systems because their underlying payment “rails” were old, slow, and costly. Article: Here
This is set to change with the launch of the digital euro, which is just what banks need to revolutionize payments with AI.
By innovating with the digital euro, banks gain a tremendous advantage. They don’t have to deal with the constraints and costs imposed by Visa, Mastercard, Apple, or Google!
Banks have a great opportunity to design a new AI payment future!
The digital euro is the only way banks can recapture payments from digital wallets and cards!
Rather than complain about the digital euro, banks should acknowledge that it is the only way banks can possibly recapture payments from digital wallets and cards!
The digital euro is a tremendous opportunity that they should all welcome.
Banks’ biggest complaint about the digital euro is its potential impact on deposits, but modeling shows that the likely holding limit of €3000 will have minimal impact on them.
That they still complain about the impact on reserves proves how inattentive they are!
Banks should focus their AI teams on new services or products made possible by the digital euro’s high-speed, low-cost digital payment.
I suggest they look at WeChat for inspiration!
👉 KEY DIGITAL EURO COMPONENTS
🔹 The creation of a retail central bank digital currency in the euro area could ensure the money anchor function of the euro in the unavoidably digital future.
🔹 Upon a high adoption rate, it could also foster the EU’s “open strategic autonomy” and lower reliance on non-European payment services. [This is all about getting the EU off of the US’s Visa and Mastercard!]
🔹 A digital euro accessible to all European citizens could foster financial inclusion by offering digital payment means for those excluded from the banking sector.
🔹 It fosters innovation through the creation of digital wallets provided by European payment service providers.
🔹 Risks: A large deposit outflow from the banking sector towards the digital euro could significantly affect reserves, but individual holding limits can effectively reduce these outflows.
🔹 A holding limit of €3000 is likely to have a maximum 9% impact on bank deposits.
🔹 Costs: The banking sector could see additional costs related to implementing the new digital currency that would add to the regular maintenance costs.
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