The Digital Euro has Enraged Half of Brussels (Politico)

Politico published an article about how the European Central Bank (ECB) push for a digital euro is provoking controversy across Brussels, especially among banks and right-leaning politicians. The legislative process, led by skeptical European Union (EU) lawmaker Fernando Navarrete, is mired in political debate: privacy advocates demand strong safeguards, some governments insist on offline use. Another ongoing debate is whether banks should be paid for distributing digital euros and ensuring their payment rails accept and profit from digital euro transactions. Also the lEuropean Parliament will have to work with the Council of the European Union, which represents member countries whose ministers are being lobbied by their respective banking industries. The final legislative framework likely won’t be ready before May 2026, so practical rollout is unlikely before 2028. [Source: Politico]

Wholesale Central Bank Money in the Context of Technological Innovation (BIS)

The Bank for International Settlements (BIS) published a report, produced by a group of major central banks, that examines the implications of technological innovation—especially distributed ledger technology (DLT) and tokenization—for wholesale central bank money (CBM) and settlement systems. The report finds that while wholesale CBM has existed for decades in the form of reserves, “wholesale CBM tokens” represent a new technical form enabling programmability and composability, but their fundamental economic function remains unchanged. The report lays out options and trade-offs for central banks, including whether to support private settlement solutions, enhance existing systems, or build new infrastructures—potentially with integration of multiple assets/tokens. While technological advances like DLT could improve efficiency, interoperability, and resilience, the report stresses that choices will differ by jurisdiction and caution is needed to avoid liquidity fragmentation, loss of central bank oversight, and inefficient duplication. Ultimately, central banks must balance innovation, risk management, and policy objectives when considering whether and how to make central bank money available for the settlement of tokenized wholesale transactions, with international cooperation seen as important for navigating trade-offs and possible next steps. [Source: BIS]

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I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.