1. Advancing Digital Payments
In 2020, the European Commission launched its EU retail payments strategy. In the second half of 2021, it will launch a review of the Second Payments Services Directive (PSD2), which we expect to be far-reaching. In parallel, there is a political push to promote the Euro as an international currency and to develop a European payment solution. The ECB has announced that it is exploring the adoption and launch of a Central Bank Digital Currency (CBDC). The final go-ahead decision on the development of the Digital Euro is expected by mid-2021 – the project has influential supporters.
Potential impact? The strategic importance attached to the payments sector could present obstacles or barriers to companies outside the EU. At the same time, it could open commercial opportunities for EU companies and FinTechs to collaborate and engage with EU institutions. The Digital Euro may create potential commercial opportunities, and further increase the digitalization of the banking sector. However, its final design and use will determine the potential impact on financial service companies and European citizens.