ECB’s digital euro under fire following settlement disruptions

European lawmakers are questioning the European Central Bank’s (ECB) ability to manage a digital euro after a recent outage in its Target 2 (T2) payment system disrupted transactions for thousands.

The malfunction, caused in part by a misdiagnosis from ECB technicians, led to delays in bank settlements, raising concerns about the central bank’s capacity to ensure financial stability.

“This is a blow to the ECB’s credibility,” said Markus Ferber of the European People’s Party, warning that doubts over existing infrastructure could undermine confidence in a digital euro. Other lawmakers echoed similar concerns, urging the ECB to first improve its current systems.

The digital euro, which would function as a central bank-backed electronic wallet, faces scepticism from both lawmakers and banks, with some fearing it could divert deposits from commercial lenders. The ECB hopes to secure legislative approval by autumn before proceeding with the project.

Attribution: Reuters
Subediting: M. S. Salama