Digital euro to cost EU banks 4-6 billion euros over 4 years, ECB estimates

Core Viewpoint - The introduction of the digital euro is projected to cost European banks between 4 billion and 6 billion euros over four years, with an initial setup cost of approximately 1.3 billion euros [1][2]. Group 1: Cost Implications - The operational costs for the digital euro are estimated to be around 300 million euros, although it is unclear if this is an annual figure [2]. - The implementation costs for banks represent about 3% of their annual IT system maintenance expenses [2]. Group 2: Benefits for Banks and Merchants - Banks will be able to recover their costs through fees charged to merchants for digital euro services [3]. - The ECB will not charge banks for its network service, allowing banks to avoid deducting costs from merchants' fees that are typically associated with private payment networks [4]. - Merchants will benefit from lower fees on digital euro payments, which will be capped below the current charges from international firms like Mastercard or Visa [5]. Group 3: Regulatory Context - The ECB is awaiting European Union legislation to proceed with the issuance of the digital euro, which aims to enhance the relevance of public money in a digital economy and protect the bloc's monetary sovereignty [2]. - The ECB is in the process of selecting lenders for a pilot phase of the digital euro, with an official launch anticipated in 2029 [4].