European lawmakers have voiced fresh doubt about the European Central Bank’s digital-euro project after an outage in the ECB’s existing payment system caused delays for thousands of households and traders.
The breakdown in the Target 2 (T2) payment system on February 27 meant banks could not settle transactions with each other for the better part of a day, partly due to an initial, wrong diagnosis of the issue by central bank technicians.
Representatives from four of the eight groups that make up the European Parliament said the incident raised some questions about the ECB’s ability to deliver on its digital-euro project, a new payment system open to all eurozone residents.
On March 10, MEP Markus Ferber of the European People’s Party, the largest group in the current EP, said: “This instance is a blow to the ECB’s credibility.
“People will ask legitimate questions how the ECB will be able to run a digital euro when they cannot even keep their day-to-day operations running smoothly.”
An ECB official said a digital euro would be more similar to its instant payment system TIPS, which is also 24/7 and handles millions of small payments every day, than to T2, which settles fewer but bigger transactions, and added that the former has been extremely reliable.
Indeed, TIPS only suffered minor delays on the day of the outage.
Still, resistance from lawmakers may still prove a hurdle for the ECB, which needs them to pass legislation laying the ground for the digital euro.
The European Commission proposed digital-euro legislation in June 2023 but not much has happened since amid scepticism from some lawmakers and bankers.
MEP Rasmus Andresen, of the Greens who, like Ferber, sits on the parliamentary committee that oversees the ECB, said the central bank had to restore citizens’ trust or the digital euro may be “at risk of failure”.
MEP Jussi Saramo, of The Left, said he still backed the launch of a digital euro but stressed “the need for the ECB to improve its own systems”.
Their colleague Johan Van Overtveldt, an MEP with the eurosceptic European Conservatives and Reformists Group, said “the ECB should prove that it can maintain uninterrupted and secure financial infrastructure” before moving on with the digital euro.
This would essentially be an electronic wallet guaranteed by the central bank, which would also provide the infrastructure. It would be distributed by companies such as banks or so-called wallet providers.
The ECB has pitched it in part as a response to US President Donald Trump’s push to promote stablecoins, a type of cryptocurrency typically pegged to the US dollar and increasingly used as a form of digital payment.
But European bankers have mostly been sceptical, fearing that it would empty their coffers as customers transferred some of their cash to the safety of an ECB-guaranteed wallet.
The ECB has said it hoped legislation would be in place by the autumn so it could vote to officially launch the project.
