Our banking expert Elina Hakkarainen opens their views on a digital euro that may be issued in the future.
The digital euro may still seem like a distant central bank project, but its effects would reach the everyday pillars of the organization, such as the customer interface, data, systems, and internal decisions within the organization.
The uncertain global situation highlights the need for Europe to strengthen its own payment independence, and the digital euro is seen as one step towards this goal. The ECB has also highlighted the role of the digital euro in terms of the euro area's payment system and payment independence.
Many financial sector players are currently in a pre-change identification situation, which means that they know something significant is coming, but the overall picture is still unclear. With the Digieuro project still on the table of legislators, questions arise about when and how to react. The starting point for approaching the concept of Digieuro should be an understanding of what it actually is.
The digital euro is a designation for a possible digital money issued by a central bank, which would be available to people and businesses in the euro area. Digieuro essentially means a digital euro that can be used for payments in the same way as cash, but in digital form.
The digital euro is not intended to replace euro banknotes or coins, but to act alongside them as a digital means of payment, both in everyday on-site payments and in online shopping and in payment transactions between individuals. In accounting terms, the digital euro would be recorded on the balance sheet of the central bank and could be used for payments as widely as current bank card services or the banknotes and coins we are all familiar with.
Finland is strongly involved in the research work on the digital euro. The Bank of Finland is part of the Eurosystem that is researching and preparing for the possible introduction of the digital euro. However, the final decision on issuance lies with the Governing Council of the European Central Bank, which means that the digital euro is in the planning phase until the Council's decision.
If the legislation on the digital euro enters into force during 2026, the so-called pilot project would likely start in 2027 and the Eurosystem would be prepared to carry out the first issuance of the digital euro during 2029.
Digieuro can offer new types of services, such as cardless payments, more direct account-to-account payments, and the possibility of building new types of services around Digieuro. In concrete terms, such changes could be seen, for example, in faster payment acceptance and new payment process alternatives alongside current card and online banking payments.
Digieuro can also increase payment flexibility, as it can offer more ways to complete the payment process. Payment would not be dependent on individual payment intermediaries or card operators, but more options could be created. Such flexibility would affect both the everyday lives of consumers and the ability of companies to choose payment methods, control costs and ensure that the payment process works across different channels.
Digieuro is closely linked to broader regulatory developments in Europe and Finland.
The importance of regulations will be highlighted if the issuance of the digieurus leads to the introduction of new digital money into payment systems. In addition, familiar requirements such as KYC (know-your-customer), AML (anti-money laundering) and data protection must be taken into account.
For many organizations, this means a need to reexamine processes: are current models working, or do they need to be changed to support both compliance and seamless customer service as the new payments era takes hold?.
The digital euro would not just be a new payment method, but part of a broader transformation in the European payment landscape. It is a broader business transformation that affects data, processes, updating various compliance and risk requirements, and other operating models and roles. In addition, the overall impact of the digital euro may be more complex than expected, in which case the discussion will also cover broader issues of stability, the role of banks, and economic structures.
Technology is an important tool for change, even in the case of the digital euro, but the real value comes from how technical solutions support business and customer experience. Decisions are still made by people, and people want solutions that are clear, secure and useful.
The digital euro requires the coordination of technology, regulation and customer experience. Financial sector actors who dare to examine their own role openly and early enough can turn the opportunities for change brought by digitalization into controlled development and competitive advantage.
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