European lawmakers are expressing renewed concerns about the European Central Bank's digital euro initiative following a recent outage in the ECB's current payment system that led to disruptions for numerous households and traders.
The malfunction in the Target 2 (T2) payment system last month prevented banks from processing transactions for a significant part of the day, partly due to an initial misdiagnosis of the issue by central bank technicians.
Members from four of the eight European Parliament groups highlighted that the incident raises doubts about the ECB’s competence to successfully implement the digital euro project, a new payment system accessible to all residents of the eurozone.
Markus Ferber of the European People's Party, the largest group in the current parliament, remarked, "This instance is a blow to the ECB’s credibility." He added, "People will rightfully question how the ECB can manage a digital euro if they struggle to maintain a seamless day-to-day operation."
An ECB representative indicated that the digital euro would be more akin to its instant payment system TIPS, which operates around the clock and processes millions of small payments daily, rather than T2, which handles fewer but larger transactions and has a strong track record of reliability.
Despite minor delays experienced by TIPS during the outage, resistance from lawmakers could pose a challenge for the ECB as it lays the groundwork for the digital euro.
The European Commission introduced digital euro legislation in June 2023, but progress has been sluggish due to skepticism among some lawmakers and bankers.
Green politician Rasmus Andresen, who serves on the parliamentary committee overseeing the ECB, emphasized the need for the central bank to regain public trust to avoid potential failure of the digital euro project.
While The Left's Jussi Saramo supports the digital euro launch, he underlined "the imperative for the ECB to enhance its internal systems."
Colleague Johan Van Overtveldt, from the eurosceptic European Conservatives and Reformists Group, insisted that "the ECB must demonstrate its capability to uphold a secure and uninterrupted financial infrastructure" before advancing the digital euro.
The digital euro concept would essentially be an electronic wallet backed by the central bank, with distribution facilitated by entities like banks or wallet providers.
In response to U.S. President Donald Trump's advocacy for stablecoins, the ECB aimed to counter with a reliable payment alternative. However, bankers have expressed reservations, fearing potential loss of deposits as customers shift funds to the safety of an ECB-backed wallet.
The ECB anticipates enacting legislation by autumn to pave the way for the official commencement of the digital euro project.