Lobbying for the digital euro: Banks fear for their profits

• Financial lobbyists have exerted significant influence over the design and implementation of the European Central Bank's (ECB) digital euro.
• The advocacy group 'Finanzwende' asserts that banks have systematically lobbied against the digital euro to protect their fee-based profit models.
• Concerns persist that the final design of the digital euro is prioritizing bank interests over its potential as a public good for citizens.

Scope of Financial Lobbying

• Between January 2022 and June 2023, 58 out of 68 EU Commission meetings on the digital euro involved financial lobbyists, compared to only one with civil society.
• 63% of meetings held by EU Parliament rapporteur Fernando Navarrete involved representatives from the financial sector.
• Banks employed 'mantra' tactics, repeatedly sharing exaggerated claims about financial instability and the decline of small banks to stall the project.

Motivations for Bank Opposition

• Approximately 11% of German bank revenues stem from payment transactions; banks fear the digital euro would reduce their fee income.
• Banks warned that the digital euro would lead to a massive outflow of deposits, using these projections to argue for strict limitations on usage.
• Despite initial fierce opposition, many banks are now participating in testing phases to ensure they remain the entities through which digital euro payments are processed.

Key Policy Issues in Trilog Negotiations

• Holding Limits: Whether the limits are set to ensure everyday utility for citizens or kept artificially low to protect bank deposits remains a point of contention.
• Fee Models: There is pressure for the savings created by using public infrastructure instead of private providers (Visa, Mastercard) to be passed on to retailers rather than retained by banks.
• Profit Margins: Banks are seeking to recover costs and secure profit margins for providing the digital euro service, a stance reflected in current Council and Commission proposals.

Civil Society Action

• Protecting Freedom of Information (IFG) laws is critical to maintaining transparency, as revealed by the access to over 380 pages of internal documents obtained via such laws.
• Translating complex financial policy into accessible language is essential to increase public awareness and balance the disproportionate influence of financial lobbyists.