The digital euro is taking increasingly concrete forms, but support from the Belgian banking sector is lacking. No Belgian bank will participate in the pilot phase of the digital euro, a striking abstention that raises questions about the future of digital payments in Belgium. The European Central Bank (ECB) recently selected 36 payment service providers from across Europe to participate in this important testing phase, which will begin in 2027. Among those selected is Revolut, but Belgian financial institutions, which have long been critical of the project, have decided to skip their turn.
What is happening
The European Central Bank (ECB) is preparing for the introduction of a digital euro, complementing physical cash. This digital currency is intended for everyday transactions and aims to ensure the stability and sovereignty of the European monetary system. Ahead of a definitive decision by European legislators, the ECB will launch a pilot program in 2027. This program includes 36 selected payment service providers, who will test the technical and operational aspects of the digital euro. Notably, no Belgian bank is part of this group. This stance by the Belgian financial sector, including major banks such as KBC and BNP Paribas Fortis, has been known for some time and is widely supported. They express concerns about the costs, usefulness, and potential risks of a digital euro for their business model.
How Belgian banks are responding to digital currency
Belgian banks, united under Febelfin, have repeatedly voiced their reservations about the digital euro plans. They fear, among other things, rising costs for the implementation and maintenance of the infrastructure, and see little added value compared to existing digital payment methods, such as Bancontact. In addition, they are concerned about the impact on their liquidity should consumers massively transfer their money from commercial bank accounts to digital euro accounts. These objections have led to a collective refusal to participate in the pilot, making Belgium an exception within the eurozone.
Background
The discussion about a digital euro has been ongoing for several years, driven by the increasing digitalization of payments and the rise of cryptocurrencies. The ECB views the digital euro as a way to maintain control over monetary policy and ensure the stability of the financial system in an increasingly digital world. However, various challenges remain, including privacy issues, the risk of bank runs, and the impact on competition among financial institutions. The European Parliament and the European Commission are currently reviewing the legislative frameworks necessary for the introduction of the digital euro. The absence of Belgian banks in this early stage could further complicate the discussion and increase pressure on Belgian policymakers.
What this means for Belgium
The Belgian abstention from the digital euro trial has potential implications for the country. Without direct experience with the pilot phase, Belgium could fall behind in the development and implementation of this potential future of payments. This could lead to a less competitive position for Belgian businesses and consumers at the European level. Furthermore, a lack of national participation could reduce Belgium's influence on the further shaping of the digital euro, which could ultimately be detrimental to the specific needs of the Belgian economy. However, it is also possible that the reluctance of Belgian banks further fuels the debate on the desirability and best approach to the digital euro, ultimately leading to a more robust and well-thought-out system for all EU member states.
The primary source for this news is L'Echo, which reported on the abstention of Belgian banks from the digital euro pilot.