DIGITAL EURO vs PRIVATE SOLUTIONS

Michael Salmony 0:12

Hello, my name is Michael Salmony and Javier and Ralf and I would like to welcome you to another episode of the Payments Trilogue. And this time we have a lovely guest, Inge van Dijk from the Dutch Central Bank, who we wanted to interview a little bit about the digital euro and how it fits in with the other things going on in payments. So Inge, maybe you could just give us a quick introduction to yourself for the one or two people who may not have met you before.

and also give us some thoughts on digital euro.

Inge Van Dijk 0:44

Probably for more people who have not met me before.

Javier 0:45

.

Inge Van Dijk 0:47

anyway, ⁓ Inge van Dijk at the Dutch Central Bank, I'm responsible for everything payments, cash and market infrastructure related. So that means I get to see a lot. I used to be working on the private sector where I met some of you in a previous life. So it's good to have a private background in a public environment. I would say it helps. ⁓

Javier 1:08

Mm-hmm.

Inge Van Dijk 1:12

As regards the digital euro, that was a topic already on the agenda when I came into office five years ago. I'm always very fortunate to really get the most interesting stuff and see how we can take this further. And for me, the digital euro evolves around two things. One is, do we believe it's wise to leave ⁓ the payments market entirely to the public sector, the private sector?

Javier 1:22

.

Inge Van Dijk 1:42

⁓ in view of the cash decline.

And the other element, of course, that came to the table, and there many arguments, of course, also on the ECB side, but the other argument that came to the table is strategic autonomy in terms of whether we have enough pan-European solutions. And of course, the one single thing that we have not been able to solve, and I've been at the other side of the table, is really getting a pan-European.

point of sale, online and offline payments product,

Javier 2:14

.

Inge Van Dijk 2:14

we just not have succeeded. We have done a number of things, but that one is still missing and it's not helping us these days, so to speak. So for me, that is the real background of the digital euro, why we are definitely consider this and why this is a topic on the European agenda and not on other continents agenda, because they have different problems to solve.

Michael Salmony 2:36

I mean, I think everybody can understand the sovereignty topic, especially now with what's going on in America, that maybe we want to make ourselves more resilient and more independent. But I think a lot of people still struggle to understand where the market failure is. I mean Wero is appearing and API and maybe stablecoins will generate a global ⁓ thing, not just a pan-European. But why is the need for the state to intervene here?

Javier 2:57

you

Inge Van Dijk 3:03

Well, not for the state to intervene, because we have cash today and we have seen with everything that's at stake that it's increasingly difficult, becoming difficult to keep up with the investments. we've had to discard, I would say, many local heroes, very good ones, because all of the countries in Europe have really good solutions. But many of them find that they just cannot make it by themselves anymore.

Javier 3:17

. .

Inge Van Dijk 3:32

So in this regard, would say that it requires a massive investment. And so it's not about a key failure. It's about we are down to what leads in the Netherlands to 20 % of cash. And in the rest of Europe, I think we are ⁓ speeding quickly down already, ⁓ even in my lovely neighbor country, German loving cash country, which you know very well.

Javier 3:47

. .

Inge Van Dijk 4:00

We are down from 80 % to just above 50%. And in the time span of a few years, we've seen what COVID can do. For us, we trickle down from 30 to 20%, and it stays, and it's gradually decreasing. So the question out there is, we don't have market failure today. We are very happy with the products that we have, certainly in the Netherlands. But we need to plan for the future. And the future is probably that the physical part of cash is at some point going out.

So the basic question is, does the central bank still want to be in the public space to ensure that we have payments in there? And with the speed at which we have seen things growing into the, let's just say, American direction, it's by no means sure that our private parties, and I hold them in high regard, will win. And I would say that certainly, I would say that we need several irons in the fire to make sure that this works.

Javier 4:42

.

Okay.

Inge Van Dijk 4:59

If the private solutions ⁓ succeed, and I hope they do, they have our full support, ⁓ all of them, if they are going to be for the pan-European part, then we still need a small iron in the fire on the public side to ensure that we keep, that we maintain inclusivity and other elements. And we cannot leave the basics of economy down to somebody who is actually in favor of

pleasing their shareholders and the customers which may not be the entire population of Europe. And maybe just one other element, know EPI is doing, EPI companies doing a great stuff and also the EuroPA Initiative and others are out there. But I would argue that they are just starting out. Wero is in five countries today and Europe is a little bit bigger than that. So we see that all of the European countries have different problems.

And of course, when you have different problems ⁓ at a central level, you try to solve them all. I'm not sure whether that's a possibility, because it's a lot. And I would prefer if we could solve some of it and that the private parties take up what is really needed in terms of added value, because that's something a central bank, ⁓ well, it's not the central bank's task to deliver added value. The central bank's task is to ensure that we have.

safe and trustworthy payment instruments that function across Europe. And I think that's the goal.

Ralf Ohlhausen 6:31

Could I ask you

on that one? Because ⁓ EPI and ⁓ EuroPA are now cooperating, as we've heard. So yes, are, I mean, each of them starting out. I guess the EuroPA players, some of them a bit longer already. don't you think that they should deserve an opportunity to show if they can move?

Javier 6:34

Okay. you

Inge Van Dijk 6:43

Mm-hmm.

Ralf Ohlhausen 7:00

quick enough to get things done and of course compared with the digital euro which is also not even starting yet so I'm not sure that'll be quicker so had that made any change to your thinking ⁓ with ⁓ EPI and EuroPA coming together rather than being competition as it originally was planned?

Javier 7:22

.

Inge Van Dijk 7:25

Now, I would hope that we are getting more on a cooperative

Javier 7:26

you

Inge Van Dijk 7:27

space because I think we can strengthen each other because, but I'll come back to your first question. Because on the merchant side, of course, there's the importance of opening up the kernel and making sure that you also make it work for the retailer. So I think we could cooperate a little bit more. A lot of people are pushing to make sure that we understand that.

It's not us, we should not be competing, we should be working together to make sure that we become stronger and that we compete towards the outside. But maybe towards EPI, I think that and others out there, they're doing a really good job, they're working very hard. I can see all the hours they spend in it's absolutely staggering what they have achieved. So high praise for that. But they're already out there. And as you said, the digital euro, ⁓ we are still waiting.

Javier 8:16

.

Inge Van Dijk 8:18

for European Parliament and councils to make up a decision. It seems to be in progress, but we're not there yet. And it will take time. So I would say that there's enough lead time there to really make a stance. And if you... So to really make an impact and have a growth market. ⁓ And that will of course also have an impact on the digital euro possibly. ⁓

Javier 8:46

.

Inge Van Dijk 8:48

But still, five countries, maybe even ten. I don't know how the interoperability works. I read the announcement, I applaud it, I welcome it. But let's see how this plays out. In the end, if I have to go to my Ministry of Finance and they ask me, what did you do when the private solutions fell through or the funds were receded and other parties came from outside Europe to the table?

What was your plan exactly? What did you have in mind? So the central bank's task is to make sure that we have a payment infrastructure and that we keep it in play. So I think there ⁓ our job is to ensure that we have something in the, some iron in the fire. And if the private solutions deliver, it can be small.

Michael Salmony 9:39

Mm-hmm.

Javier 9:40

But then, let me check if I am right in understanding you. So if the private solutions succeed, this sovereignty argument has no value because there is no issue with the dependencies and autonomy. So it's more a question of the ⁓ acknowledgement of the decrease in the use of cash that moves the central banks to think of this digital euro and

Is that per se something bad or is it neutral? Because there are many other societies which are far ahead in the non-use of cash, I would say. But you mentioned the financial inclusion as a final argument. Do you think the digital euro addresses financial inclusion?

Inge Van Dijk 10:32

The digital euro will address financial inclusion because it's inclusivity by design. That's not an easy task, by the way, but maybe coming back to the first part. I don't believe, Javier nor have I ever believed, that you need in a ⁓ payment environment just a single solution to make up for your strategic and autonomy. I don't believe in that. We need several. So from that perspective, strategic autonomy is not...

Javier 10:53

Mm-hmm.

No, no,

Inge Van Dijk 11:01

catered for by just one pan-European private solution because that will become a single hub that dictates everything and we're not there yet. So you need good competition. I might even argue that the fact that the digital euro is lingering out there has spurred things on and has certainly made sure that people are moving, moving to an extent that we have not seen in the last 10 years.

So, well, that's not the valid argument because you should not do that for that reason, but that's an interesting side effect, I would say. So the strategic autonomy part will always be there for a part. It's about making sure that the whole of the Eurozone and Europe is being connected, not just the ones where the ⁓ initiative takers are active or are targeting. It's about making sure that we bring cash to the new age. And it's about, so it's all of these elements together.

Javier 11:35

Yeah,

Inge Van Dijk 11:56

bring it to the table.

Javier 11:57

but the the

Inge Van Dijk 11:58

keep in mind, a central banker, basic solution, let the added value go to the private sector and that's as we all understand where the real money is made.

Javier 12:09

Don't you think that having some private solutions in Europe precisely make global solutions also an add-on, something that complements the European landscape? Because then you will not be subject or bound to those global or American or card solutions, because they will not be the only solution. So they will be a competitive solution. So why do we need many more?

regardless the cost, because I do agree that there is a value in some solutions. What I may argue is that the cost may not make it worthwhile.

Inge Van Dijk 12:51

⁓ Yeah, how do I say that? I think ⁓ if we build an infrastructure for this online and point of sale environment, it's going to be costly. And we have had a lot of costs already in the past making investments and the pace with which these investments go, it's difficult to keep up.

And of course, there are some other parties out there who have really deep pockets. So this is going to cost us. And the question is whether it's a business case. For me, it's not a business case. This is about the basics that we need to have in place where we cannot play with. We cannot take the risk of not delivering. So we need to ensure that we act and cooperate together to make sure that we build and make it work on both sides.

And there I would really welcome some leadership also from the private sector to step up to the microphone and consider not just your shareholders investments, but really make a commitment to get it working for Europe. And it will be costly, Javier. I'm pretty sure of it. But it's for the better. It's for our own good.

Michael Salmony 13:48

No.

Javier 14:04

Good.

⁓ I'm fine with having it costly, but then you should tell those who are going to pay that they will have to pay.

Ralf Ohlhausen 14:17

Could I come in on the cost?

Inge Van Dijk 14:18

It's got a different

distance for who it's going to be costly, yes or no. I would argue that the retailers... Sorry, Ralf, you go ahead first.

Ralf Ohlhausen 14:25

Yeah.

Well, I have to bring something up, which I know I've done before on this on this on this podcast, but I have to say it here and discuss it with you because we have just spent five years, six years, and millions and billions in an infrastructure that allows every access to every single payment account in Europe, which is based on PSD2

And as we all know, that infrastructure may have to be optimized. So APIs maybe not working well enough, but I don't think it is that much of an extra investment to make that work. And if we are looking at sovereignty, if we are looking at being able that every single one in Europe, in all countries,

Javier 14:57

Okay.

Ralf Ohlhausen 15:24

with all banks

is accessible and can make a payment and account to account payment, not a card payment, then the obvious solution, the obvious choice got to be open backing because there is neither the digital euro nor EPI nor EuroPA nor anyone else will get up to we will be able to reach that same or have that same reach within the next

Javier 15:35

you

Ralf Ohlhausen 15:53

decade, if ever. So why are we not just expanding on that? Why are we reinventing new and building new infrastructure that all the banks are doing? EPI is doing, EuroPA is doing and the ECB is now doing. Why do we have to spend that money again?

Javier 15:54

Okay.

Inge Van Dijk 16:15

Yeah, okay, so you're talking about the instant payments railways and how we can make that available and put a QR code on it or something and how we get that into play. Is that just so that I understand you correctly? ⁓

Ralf Ohlhausen 16:27

Well, access

the bank account. basically everyone, you know, if someone, God forbid, would, whatever, ⁓ stop some international currently dominating payment solutions here in Europe or put a high tax on it or whatever, then the only one fallback that we have

Javier 16:44

.

.

Ralf Ohlhausen 16:53

is open banking. It's the only solution that every person in Europe can use without another onboarding, without signing up, without getting a card, without getting another bank account because they already have one. So it's the only solution which is readily available overnight

if something else happens there.

Inge Van Dijk 17:14

I would argue that

it's not entirely readily available. I've tried myself with the... Well, I'm not sure. I don't call it open banking. I just call it instant payments. So we're lifting on the instant payments infrastructure and we're lifting on the distribution of the banks. This was entirely the reason why we said, okay, let's make sure that we use the same distribution network.

Javier 17:27

Yeah.

Inge Van Dijk 17:39

because you can then lift on what you have in existing place.

Javier 17:41

you

Inge Van Dijk 17:42

We're also lifting on 20022. I think one of the things that has changed, so there things there that we try to reuse as much as possible so that we don't build it from scratch and it's not being built from scratch. But it does have to be on a central bank ledger. So that makes a bit of a difference because it's a central bank currency. And of course, the privacy argument is also very strong. So meanwhile,

Javier 18:05

Okay. Okay.

Inge Van Dijk 18:07

The public across Europe is less trustworthy of parties, funnily enough, because they give their data easily to commercial parties, big American players, but they are less

Javier 18:08

⁓

Inge Van Dijk 18:23

trustworthy of others. So we have to ensure that privacy is there from the start. And I think that's us to one of the nice added values in the digital euro, which is the offline version, which keeps it small.

which builds resilience. So I think the offline digital version of the Euro, certainly in the Netherlands where we have already have great online solutions and people understand it less, is an important added feature that builds onto that. yes, now just make, yeah, just making the point back to the cost. So yes, it's costly. No, it's not as costly as the costs that our merchants are paying.

Javier 18:52

.

Okay. .

Michael Salmony 18:53

I mean, that's a big solution that we're working on here.

Inge Van Dijk 19:05

to the retailers, because they are complaining everywhere, certainly in the Netherlands, the fees that are going up and up and up, and they have no alternative in play. If cash is also not there, who's going to save them in the end? So I would argue that the retailers and the consumers have a very good case for this. But it's, of course, something that comes on top of all of the banks.

Javier 19:29

.

.

Inge Van Dijk 19:34

and the compliance agendas and everything they need to do. So this is something that is not easy, but of course this is also not a task that we take lightly. It's an important goal that we are trying to achieve.

Michael Salmony 19:47

I mean, I really like what you're saying about the offline digital euro. think a lot of us have a, I mean, it is not easy to do,

but I mean, that sounds like a really natural thing for a central bank to be doing. It's an offline version of cash. It's like cash. I can pay P2P and it's private and it is a modern form of cash. So I would fully understand when the central banks go in that.

Javier 19:59

. you

Michael Salmony 20:13

And you've given some robust arguments on some of the online versions, but I mean, there are still two things that nag at me quite honestly. One is you rightly said people like

EPI haven't covered the whole of Europe yet, and they've only got a few countries and neither of the other ones. But I could put it back to you, ⁓ the digital euro doesn't cover the whole of Europe. You're only doing euro. You are not, there are about seven countries in Europe, if I remember rightly, that don't have the euro.

So that's also a fragment if I can be sort of a bit blunt on that, right? What do you say to that?

Inge Van Dijk 20:52

Well, on that part, would say the numbers in the Eurozone are growing by the day, also probably because of the geopolitics that's ongoing. We see a lot of people coming on board. So in that perspective, I would say that the numbers on the Eurozone countries still outweigh that aspect. But it all ties down to the fact, do you want to have one instrument that you entirely depend on? Do you want multiple?

Javier 20:56

.

Inge Van Dijk 21:20

And what is the position of a central bank in ⁓ payments to the public? Do you want to be there? Because if you don't deliver now and start doing this, because we all know it takes 10 years or more to develop a payments product, certainly pan-European. If you don't start now, you're not prepared for the future. And that would mean that you, as a central bank, say, I'm not going to be in this business anymore. I'm going to leave it entirely up to private parties. That is very difficult to say.

Javier 21:50

But you get precisely

My reluctance stems precisely from the nature of central bank in providing services to the public. Precisely that's what I question. Is it fit to compete commercially in a market? That's my question. And I would pose you a question. Out of the 20 countries in the Euro system, do you know how many central banks in those countries have adhered and have not adhered?

Inge Van Dijk 22:03

But that's what we do today also.

Mm-hmm.

Javier 22:21

to the instant payments. What does that show about sensitivity towards the public? Have they moved? they innovative so that they have all rushed to join the instant payments or are they laggards and they are not adhering fast enough and then preventing many businesses and public administrations to reach instant payments?

Inge Van Dijk 22:45

I like your argumentation, Javier. I really appreciate it. So I would say that we are late to the table, definitely. you are point taken. And I totally agree with you there. But in regards the services, of course, we are providing the cash today, every day. I have a big printing factory. I count the notes. I have to check them. I have to see the counterfin. I go in.

Javier 23:08

And and 5 days a week and 5 days a

week.

Inge Van Dijk 23:13

I go into the physical shops, we check the machines if they are working. So the cash, which is the guaranteed, the best guaranteed money, which is still out there, certainly if you compare it to stablecoins, I would say, is still being provided by the central bank daily. And we are stepping in to ensure that we can continue this. But we know it's something that is, we need to prepare for when, for some reason, cash is not going to be there anymore.

Javier 23:25

Mm-hmm.

Inge Van Dijk 23:40

Today I also use the distribution network of the ATMs of the banks and they're not happy with that either. So for me, this is about replacing the cash, making sure that we have some form of money out there. And the thing with the fact that if you have an offline digital Euro, it's going to be very hard to explain to the public. You can use it in this type of situation, but you can't use it in that type of situation. And that's the whole thing about the combination with offline and online.

Javier 23:44

you

Michael Salmony 23:46

Thank

Javier 23:51

. you

Inge Van Dijk 24:07

I can understand my colleagues who are much more interested in the online version because they don't have a good online solution as yet from home. We

do. We have to have iDEAL. Very happy with it. And also some other good solutions out there. And of course that translates into Wero, but some others don't. They don't have a solution ⁓ back home. So they really need it. And that's the thing about Europe. You need to make it work. But I would argue, so if I have a solution as a consumer,

Javier 24:21

.

Inge Van Dijk 24:36

And I campaign nicely with this offline. How am going to explain that I can use it offline? I can even use it P2P. I can't use it in the online version when we all know that the point of interest is going to be in the end the same thing, whether it's going to be at the physical point of interest or at an online point of interest. So that's difficult to explain. And there I agree with the policy that, okay, so if we have to do something, how do we make it work together?

Because we want, again, we want the private solutions to succeed. We really welcome that effort. There's no way the central bank would do that, but we have to make it work together somehow.

Ralf Ohlhausen 25:15

But in for that, you know, I was surprised to see at

Javier 25:20

Okay.

Ralf Ohlhausen 25:22

whatever that was 10, two, three years ago now already that the ECB made more or less a decision that the digital euro should not just be a technical scheme like to like, as it it or as it ends, but it should become a brand, should become an end user and end to end scheme.

Because if it had stopped short of that, if it had basically become an alternative to SCT Inst, to Instant Payments as we have it in Europe, then it would have been easy for any solution to either use SCT Inst or Digital Euro or both ⁓ for their branded offer to the market. So why is it ⁓ that the Digital Euro is getting into competition?

with its own brand as opposed to just providing the payment instrument that then could be used at the same level as instant payments.

Javier 26:19

you

Inge Van Dijk 26:26

No, I like your question. It's a good question also, a very valid one, I think, in terms of how visible do you need to be? Can you be at the back end where we are traditionally quite okay? ⁓ The thing, of course, here is that you have in the end the digital Euro bank account because we need to guarantee this money like it's cash. And for that reason, they need to understand what is now my... And that's difficult one, of course, something that is definitely...

Javier 26:46

.

Inge Van Dijk 26:55

on the table, how do we organize that so that it works? What is my wallet with my bank, my regular wallet? And what are the guarantees behind that? And what's my digital euro wallet? So you need some way of identifying that. So the brand is not so much as a, we need a big brand to go into competition, but it's for recognizability. And I think those of us who have been into the card business for a long time, they understand this. So you need to have some form of play.

Javier 27:12

you Okay.

Inge Van Dijk 27:25

that makes it visible, okay, where am I tapping into now? And what are the rules of that game? So it maybe didn't start out that way, but it became sort of inevitable along the way. But

it's not meant to go into competition. It's meant to be, okay, so if you have to make it work, you enter in that arena, say, okay, that's really no other way to do this than to be very clear when it is a digital euro that you're using, because you get into a different format and a different scheme.

Javier 27:55

Mm-hmm.

Michael Salmony 27:55

Hmm.

Ralf Ohlhausen 27:56

From the

fintech side, we've been pushing now for quite some time, actually, I think, again, also two, three years, this discussion has been up about creating a what we call a trust mark or recognition mark for instant payments, something that people would understand when they go into a shop that they now realize, okay, well, now, it's not only cash, it's not only cards I can use, now I can also use account my account.

Inge Van Dijk 28:15

Exactly.

Ralf Ohlhausen 28:21

Like well, it's a logo, whatever it is. It's maybe just inst or it's it's the equivalent of 50 years ago cards accepted here It doesn't have to be a specific card and they of course don't accept every card but It's just to show people that it is a possibility here to use my account So we hope that now with a new sort of push towards making instant payments at the point of sale in particular work

that this trust mark or recognition mark will come in. So I hope that there will be such a brand like a SEPA inside or whatever you want to call it. But this type of inside brand. Yeah, well, a complementary brand, not a competing brand. That's it. That know, that principle is what I was hoping for.

Inge Van Dijk 28:59

Yeah, we had that discussion also, digital euro inside, whether that would work, yes or no.

I think we,

yeah, I'm not sure, Ralf, whether, but let's just say that I would definitely be open. And I think it would go for many of us to discuss how we can make it work. And I don't think we are entirely there yet, but it would be great to have those discussions and really challenge each other to see how we can make it stronger and work it and have it work from both sides. So definitely something to discuss. But I understand your call. Yeah.

Javier 29:39

Inge, you have mentioned

Inge Van Dijk 29:39

I wasn't aware

of that by the way, but yeah.

Javier 29:42

You have mentioned several times the expression to make it work. And I would like to make it work. My request to the Eurosystem would be, together with the developments that are taking place now, the rule books and the schema and everything that is taking place right now, would you also be able to devise a set of criteria by which you could judge the success or failure of the digital euro five years after launch?

Inge Van Dijk 30:13

Good question. Do you have similar criteria for EPI to define it by success?

Javier 30:14

Or 10 or what?

But

we need to know whether it's succeeding or not. And not waiting until then to know. We need criteria in advance to check whether it's doing well or not.

Inge Van Dijk 30:30

Okay, and what type of criteria

would you like to see there?

Michael Salmony 30:34

Can I add

Javier 30:34

No, it's, we

are created the...

Michael Salmony 30:37

to that? I think you've raised a super important point and I've written about this many times because one gets the impression that the digital euro is trying to solve a lot of things simultaneously. know, sovereignty and inclusion and resilience and privacy and yet, you know, there are actually some, you know, if you go around the world, there are about 40 things that CBDCs are trying to solve. And in Europe, I've seen about 12.

Isn't that rather a lot? To Javier's question, are you going to do a scoreboard of how many of these five or 12 things, how far you've succeeded in that? think Javier has raised a really interesting point there.

Inge Van Dijk 31:05

Five.

Let's just say if you were to do that, the question is whether we would lose ourselves in scoring the board where it's all about the principle in terms of what you think is really strategically important. So we've got five, I think, and it's very clear that we have five. Other continents have totally different things. One of the things that we don't have in there is programmability, of course, which is something that is of interest on the wholesale side, but something absolutely not wanted.

Javier 31:36

.

Inge Van Dijk 31:48

the consumer public. So we need to be very careful with the words also we use. But no, I would not spend my time in a scoreboard, but in the end, of course, you will want to measure somehow as a Eurosystem internally what you want to achieve. And we all know, for example, a discussion that is logically out there, what is critically enough in terms of volume to be able to have a, play a role without intervening too much.

How much is that? How many times do you need to use a payment instrument for it to be usable? Also when you are in a Spanish outreach situation, for example, that people don't then say, OK, where was that thing? Did I know how to use it? So that you really have a payment instrument that is regularly enough used so that it brings something to the table. It's a tough discussion.

So you can lose yourself in that discussion or you can just go ahead. So I'm not sure whether we would go for the criteria. It's also not up to me. Let's be sure because I'm just one of the team members on the team and we're there with a lot of people. So I would say let's direct that question to the ECB. I'm pretty sure you already have an answer from them in this regard.

Michael Salmony 32:45

I mean, you need to be. ⁓

Okay, that's interesting.

Javier 33:03

.

Michael Salmony 33:06

I mean, I do take your point that you need to be in a Goldilocks zone, not too little and not too much. If you're too little, then you've wasted your time. If you're too much, then it kills all the private solutions, right? So you need to be sort of in a Goldilocks zone. Now that makes a lot of sense. I think we're gradually reaching

Inge Van Dijk 33:13

This.

Definitely, that's definitely what we don't want. Somewhere in between. But if I put a

macroeconomist modelist on it, it doesn't get me the answers that I need probably. Because you need a bit of pragmatism also from the private sector. Yeah, that's what you get.

Michael Salmony 33:36

That's economists for you. Yes, less economists.

Very good. Yeah. Maybe just a final question to you, Inge if you will allow. That's about the timing. You said, think, absolutely rightly, nothing happens in payments in less than 10 years. And that's probably going to be the case here too. But I mean, I've seen the sort of latest timings for the digital euro. And it looks like by the time the law has been finalized and it's gone through the trilogue and this and that,

and you've started to implement it and it's started to roll out, we're in the 2030s. And that is quite a long time. And if you look at the speed, which sort of stablecoins, for example, are progressing, doesn't that scare you a little bit that you're going to be behind the curve?

Inge Van Dijk 34:24

I hope that the parliament speeds up, but no, just kidding. ⁓ So ⁓ I think everybody's aware that competition is out there. My understanding is still that if in 2026 we get some form of agreement, then that probably brings us to 2029 or 2030 for the start. So it's going to be later indeed. So I think your timing is not too far off.

Michael Salmony 34:27

you

Javier 34:28

.

Michael Salmony 34:49

list.

Inge Van Dijk 34:54

in terms of where we will end up. Is it too late? I don't know. But is there a reason to discard? No, definitely not. On the stablecoins, I think it's going to be very interesting development whether and how far this will actually bring reach because we all know as payments people, it's about reach, it's about the network effect. That can be massive and go quickly with stablecoins.

Javier 34:56

you .

Inge Van Dijk 35:20

But for sure, the stability part and everything that we need

to put in order, also needs to be in place. So I think everybody's word about what this could do. And this will also tie into the politics of the private solutions because we're all seeing that coming. And ⁓ let's just say the openness with which the Americans today see stablecoins.

is somewhat different than maybe was a bit of time ago. We have MiCAR, of course, in Europe, which is a good first start, needs to be upgraded. But I think we see where things need to be done. Some other parties in the world are totally anti. So it's still to be seen how quick this will go. Technically, things can go quickly.

Javier 35:58

.

Inge Van Dijk 36:15

But we all know that it never is about technicalities. Technically, you can solve everything. It's about the governance, it's about the AML, it's about the risks, it's about the KYC. If they become big enough and they become strategically important or systemically important, they will also have to face the same music as others do. So this is, of course, definitely on the table because stablecoins cross borders much more quick than others. But this has certainly the attention also of

Bank of International Settlements and everybody in there.

Javier 36:47

Mm-hmm.

Ralf Ohlhausen 36:48

Can you

could you put it on the spot? Could you comment on the announcement by the sometime ago there from the how many European banks but including the biggest Dutch bank ING providing a stablecoin? And so what do you think about that from your perspective?

Javier 36:59

.

Inge Van Dijk 37:09

It's a private endeavor and we have to be a bit careful about it because apparently

they're going to be based in Amsterdam so we also have a different head here at the Dutch Central Bank. But looking at it, the Dutch Central Bank, we have always been open to the innovation that brings distributed technology and it's clear that there are some benefits in there.

Javier 37:21

. .

Inge Van Dijk 37:34

This is about a private set of banks that want to undertake a stablecoin in euro. It's interesting. It's the

first one out there. think the rest is all in US dollar. I don't know anyone in any other. So it's an interesting initiative from my perspective as a payments person. And I wish them well. I think it's also very interesting that they, think they have nine banks in it.

covering eight countries. So it takes from the start the umbrella approach, getting more countries in. think that's a very good start off. And let's see.

Ralf Ohlhausen 38:15

Well, well, because had this discussion actually today, ⁓ if we have ⁓ some holding limits on a digital euro, which is what is probably going to happen.

to avoid problems of like a bank run or others. to my understanding, none of these stablecoin initiatives would have an equivalent. So we have these discussions about, you know, deposits going back and forth between banks or ECB and limiting that impact on banks. This is why one of the reasons for having this holding limit so that people can't have too much of it, can't... ⁓

Javier 38:45

.

Inge Van Dijk 38:51

Mm-hmm.

Ralf Ohlhausen 38:53

go have too much money move from the bank from the bank account to the ECB account. ⁓ But for stablecoins, I don't think that applies.

Javier 39:00

Okay.

Inge Van Dijk 39:04

I am, so, and your question is?

Ralf Ohlhausen 39:04

So I, know, holding limit. Yeah, so I think they could be,

⁓ well, the laughing third party in the end.

Inge Van Dijk 39:11

Yes.

They could be. They could very well be. So from that end, I think there is a limit in the MiCAR resolution of regulation in terms of what you can do, yes or no. And certainly we will also have some discussions on multi-issuance of stablecoins. But definitely that's a risk that is out there. The question is whether the risk on the bank runs for the digital euro is really that high. But I think there will come some publication out in terms of what it does.

And sometimes if that's the way to go to set the holding limits and that gives people comfort, you need to do that and stick to it. It also fits in. So I think whichever holding limit will be set for the digital euro will, because in the end this is a payments means and this is not about deposits moving, will be fine for the digital euro. So I'm totally fine with how that's playing out. If you're going to talk about stablecoins and really moving deposits.

That's a different ballgame indeed. But as to my understanding, they want to fit within the MiCA regulation that I saw that in the press release. So they are on the right track from that perspective, I would say.

Michael Salmony 40:27

Very good. I think I would gradually call an end if that's okay for everybody, unless there are any last comments that anybody wants to make. I'm afraid I opened up a bit of a can of worms for the stablecoins at the end. So I'm not going to ask you whether the digital euro is going to end up on the blockchain or whether they're going to be stablecoins who are backed by the digital euro. There's plenty more we could discuss on that. But thank you, Inge. You've been incredibly robust and eloquent. And as always, it's a joy to talk to you.

Thank you very much for sharing your insights. So thank you to you and Ralf and Javier and myself want to thank everybody who's watching this and hope you enjoyed it and look forward to seeing you next time.

Javier 40:59

Thank you.

Inge Van Dijk 40:59

Most welcome.