Committee on Economic and Monetary Affairs Ordinary meeting
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ECON European Parliament
Follow its sittingsSpeaker 2
This time around, we will focus on two work streams: experimentation and exploration. The experimentation work stream encouraged the market to develop innovative feature and value added services such as conditional payments. This could enable automatic refund in the event of a travel disruption or ensure travelers always pay the best available fare, making transportation easier and cheaper. We also explore the innovative potential of the digital euro offline functionality by also holding an offline payment hackathon. The exploration workstream is more forward-looking.
It will examine features that could potentially be integrated into later release of the digital euro, such as, for example, micropayments, the use of artificial intelligence in payments and machine to machine use cases. As for the synergies with the private European payment solution, we are also making progress on discussing with the industry how the digital euro would fit into the current payment ecosystem, with a special focus on synergies with the domestic European payment schemes. We have identified two promising avenues for integration, co hedging with the domestic scheme and establishing common European standards. These two synergies demonstrate that the digital euro will not compete with the private means of payment, but instead will help them to scale across Europe. First, the digital euro can complement existing domestic European payment schemes through co-hedging on physical cards.
This means user would only need a single card to pay not only at the merchant that accept the domestic scheme, but also any other merchants in the euro area, thanks to the converging with the digital euro. Similarly, the digital euro can be used in digital wallets provided by European banks alongside domestic card or account-to-account scheme. This would reduce dependence on international card schemes and would increase the revenues of European payment service providers. Second, the digital euro will set a European standard for retail payments, a set of interoperable rails that private providers can build on, innovate, and scale across borders. By this summer, we expect to make an announcement on the European standard we will use for the digital euro.
Thereafter, we will work closely with market participants to support them in getting ready to embed these new standards into the payment terminals as soon as possible. The digital euro standard can only be finalized once the legislation is adopted, and only then can the market have certainty that these standards will be widely deployed across the euro area. Prompt adoption of the regulation is therefore crucial to unlocking the benefit of this project, especially what they can bring for the European private payment solution. Finally, let me turn to the pilot activities. The pilot will focus on person-to-person and person-to-business payments.
The exercise will be conducted through a mixture of activities online and offline. In early March, we launched a call for expression of interest inviting PSPs to take part in the pilot exercise. Selected PSPs will be notified in June, with a view to starting development already in the third quarter, ensuring readiness to launch the pilot in 2027. This pilot activity is a concrete part of our preparation to ensure technical readiness for potential issuing of the digital euro as of 2029, based on the working assumption that the colleges later will adopt the regulation in the course of this year. Let me conclude.
Our technical work is progressing steadily. The Eurosystem's role at this stage is to be ready. A clear and timely legal framework would give market participants and us certainty about what needs to be done to be digital euro ready. We would look forward to the accounting committee taking his position on this important market. And now I stand ready to take your question.
Thank.
You, thank you.
Speaker 1
So much, Laurent. So Q and A session. One minute and a half for the question, two minutes for the answer. And I would start with Fernando Navarrete for the EPP.
Fernando Navarrete Rojas
Thank you. Thank you, Chair. Thank you, Mr. Cipollone. First of all, as rapporteur for those here, I would like to reiterate my appreciation for the supporting technical work of the ECB to all the negotiating team. Today, I particularly want to discuss what I think is the fifth missing strength, which I think is financial stability.
I hope the digital euro is a financial stability element for the Eurozone. So, in particular, on the technical note that the ECB issued in the last months. So I would like to ask you in particular because the report clearly states that the liquidity impact of the digital euro introduction is manageable from a financial stability perspective for the Eurozone as a whole. But it appears in one chart in particular that two countries that are labeled as b and f, without any names, the banks in that jurisdiction may have some stress to fulfill the LCR standards. Can you today please be transparent and name which countries those are?
And what's the weight of the banks that are under those circumstances in terms of the national financial system and not the Eurozone as a whole? Because I think it's important, because the banking union is still a promise and not a reality yet. Thank you.
Speaker 2
I am not in a condition to disclose this data. The for obvious reason. But overall, you know that we are talking about the Euro Area level, and we still have, you know, one single market. What do we know about this exercise? Let's be clear, because you stated one precise use case.
You are referring to a case in which, let's be clear on this. We are assuming the case you are referring to is a case in which the holding limits will be €3,000, and all the cities in the euro area will use this amount at the full extreme. So it's the most extreme case. On top of that, the assumption is that the central bank will not intervene in this case. Let's dig a little bit into the economic meaning of this.
We are talking a case in which people are so scared about the euro area that they will take away all the money they can from the banking sector and put it in the digital euro. But we are talking about retail customers. Now if you look at the banking sector in Europe, two thirds of the retail deposit are not from customer people that can use the digital euro. This saving comes from corporation and wealthy individuals. So if there is a crisis, this money will be out of the country in one second.
The digital euro would be the least of the problems on that occasion. And, certainly, we have said many times, if such a crisis would develop in Europe, the central bank has to intervene to provide the liquidity to the whole system. So once again, this is an extreme case that we simulate on your request because it's true that we need to be, to test also tail events. But we are talking about a tail event. And in any case, at the European level, we are talking about a situation in which, if I recall correctly, only 13 banks in the Euro Area will have the risk to be at below the liquidity cover ratio, and the amount these banks that I'm referring to would account for less than 5% of the total asset in the Euro Area.
So in the most extreme case, you know, in which people are so scared by the situation that they will take all the money out of the system, the banking sector will suffer, but because of the digital euro for the amount of just I just I just referred that. I would not call this a financial stability risk.
Nikos Papandreou
Thank you, Chair and Mr. Cipollone. Slightly more specific, given that we've had huge technological progress in payments, given that we've had very large technological progress in payments in the last 20 years, this progress has not seemed to have been reflected in the fees charged in the payment system. And there's a great body of literature suggesting that the existing percentage-style per transaction pay system is regressive, especially on small merchants. So much of the literature proposes fixed fees as a way to solve this problem.
Given your stewardship of the digital euro so far, and based on your conversations with council, do you think there is room for improvement in the provisions and the commission text on compensation, especially with relation to the small merchants? Thank you.
Speaker 2
Thank you for this question. So let me say, first of all, that the way we are designing the system will make sure that the participant in the system will benefit because the cost will be reduced and the fees that we pay to non-Europeans will be lower. So the point is, how do we share these savings? Obviously, this is not for the ECB to decide, but it's really a political decision. In any case, and you are right, especially small merchants will benefit the most out of this.
They don't have any negotiation power vis-à-vis big providers of payment system. And from our information, it seems that they may pay four times as much as the large merchants. Now the proposal, the proposal that came out of the general agreement suggests that the cap could be certainly much lower than the current cost for the small merchant, and they could save as much as half of what they pay today. Now this is for the legislator. We need to also recognize, though, that the PSPs have to do some work to provide the digital euro.
So it's fair to provide them a fair attribution, you know, a compensation for the amount that they spent. And indeed, as I said before in my statement, there is ample room for private sector providers in Europe to be remunerated and to be financially stronger than they have today. Again, how do you distribute these benefits? It's up to you depending on the political decision. What is important for us is that the whole system will benefit and that all participants will have an incentive to stay in the system.
That is very important.
Thank.
Mireia Borrás Pabón
Thank you for your presentation, mister Cipolloni. I'll be very clear. In the Patriots, we think that the digital euro is an unnecessarily risky, and mistaken project. Unnecessary because citizens also have rapid payment systems available. There's no market failure to justify it.
It's risky because retail euro could provide banking imbalances by moving funds around in times of crisis. And it's also mistaken in its approach because it claims to resolve a competitiveness problem with more public intervention in Europe, which has an excess of bureaucracy, regulation, obsession with replacing markets from offices in Brussels. So this does not instead of you promoting existing developments, you're promoting this public instrument, which is inefficient and already will be obsolete in a few years. And this is an ultimate substantive problem, which is freedom, so that the central bank will be regulating payments by citizens, and that'd be very dangerous because who knows that the ECB wouldn't use this power in the wrong way. So how can you assure that in the future that nothing untoward would happen?
So, we would ask the EPP not to cede to the pressure from others, and we need more confidence in our citizens and in our businesses.
Speaker 2
Thank you for this question. You raised many issues. Let me pick up some that might be of interest to everyone here. You said one word which is very dear to my heart, which is freedom. Let's talk about freedom.
Today, they do not have the freedom to use their money because the central bank money is people's money. Don't forget this. Central bank money is a liability of the central bank to the people. Today, people do not have the freedom, speaking about freedom, to use their money for about 1 third of their transaction. If you want to use cash, which the ECB defends, if you want to use cash to pay for your expenses online, good luck.
You cannot. So we are in a situation in which the freedom of people to pay with their money is constrained. The digital euro will bring back this freedom to the people. They will be, if they want, able to pay with their money for all use cases in Europe. You said, it's unnecessary.
There are 15 countries we update this every time. There are 15 countries in Europe, in the Euro Area, out of 21, in which a citizen, if we want to go in the morning and buy milk, needs to use cash or some means of payments that are not in the hands of the European citizen. There we do not have any control, nor you, nor me, nor anyone else. The availability of that means of payment relies on the will of somebody else that is not sitting in Europe. Now the ECB, because of what you've wrote in the treaty, has the mandate to provide a resilient, robust, efficient payment system.
How could you say that such a system, which is completely relying on non-European providers, can fulfill this? How do we ensure the ECB will fulfill this mandate. The ECB is accountable to you. We come here. We have a treaty.
We are, you know, under the control of EU law. But this could be a formalistic answer. But the fact speaks for us. This is not the first time that the ECB runs a payment system. You might know that we run a couple of payment systems that every week process as many transactions as the Euro Area amount GDP, so every week.
And we have been doing that for 25 years, and this seems to me that, knocking wood, everything is working well. And this is, you know, there are statistics. You can go on our website and check on that, comparing to other ecosystems. I can tell you more. We run the fast payment system in Europe.
Today, you might not know that, but we process 10,000,000 transactions per day, not just of Europeans, not just of Euro Area citizens, also citizens of other two like Denmark and Sweden who have decided to dismantle their own payment system and onboard on the Euro system payment system. So this citizen might have some trust in what we are doing. Thank you.
Speaker 10
Thank you, chair. Mister Cipollone, welcome back to the European Parliament. As you know, from the beginning, I've been quite skeptical about this project. One of my concerns is that ordinary consumers, European citizens, in their freedom, will choose not to use the digital euro on a daily basis. I think there's a real risk of this happening after the introduction of this payment option.
In numerous meetings with consumer groups and individuals from my country, Croatia, my impression is that public opinion is either indifferent or skeptical on this issue. So, has the European Central Bank considered some kind of public campaign to win over European citizens? I don't believe the case has been made. This is my political view that it's technically, most of the attention has been focused on the technical preparations, but the larger issue of convincing the European public that this is a good idea, that it's necessary, in my view, has not been made. Have you considered, or what would be the main arguments in persuading ordinary consumers that this is a good idea and absolutely necessary?
Thank you.
Speaker 2
Thank you. Thank you for this question, which indeed is a central issue. Let me push back on this. I'm sorry to say this because we don't have the same information. We, as you can imagine, run systematically focus groups, but also surveys on this.
The information we have is the following. When you get in touch with people and you explain what the digital euro is, 66% of the people say that they might use or are interested in using it. The reason being people are really attached to the cash because they see a value on that. And the digital euro being the digital brother of the cash resonates with these people. We are in a situation in which you said what the ECB could do to win this case.
My question to you is, and then I will come back to your question, is why should be the ECB to do this? We are a technical body that is supposed to implement a decision by the co-legislator. In any case, we cannot go campaign for a solution that is not born yet. We would be in this strange solution. And in fact, you have seen that our communication has been a reactive communication.
Anytime we are asked, we provide an answer, and rightly so, because the ball is in your court. You tell us whether you wanna do this or you want to do this. You tell us how you want to do. You are the master. ECB, it's not part of the college leader.
I think we have made a very important case for why we should do, but to you guys, not to the people. Why? Two years ago, when I mean, I started this journey. I had black hair when I started to do this work. But, anyway, two years ago, three years ago, when I was talking around saying, look, guys, we have a problem of dependency.
We are not owners of our destiny. People would reply to me, you know, the digital euro is a solution in search of a problem. Now it seems to me that we have recognized that we have a problem, and this is already a step forward. Now the issue is whether the digital euro is the best solution to that problem, but certainly, we have realized that it is a problem. So to me, to make a long story short, there are three arguments that can win the support of people.
One is simplicity. One solution for all your needs. One solution. Your bank gives you a piece of software or hardware that you can pay with everywhere in Europe for all use cases. One simplicity.
Second, resilience. You know that even if there is no connectivity, you can pay because of the offline solution.
Third,
Speaker 2
Before being a consumer, you are also a citizen. And I think you will be reassured knowing that the digital euro would provide to the Europeans an additional layer of resilience so that if something goes wrong and can go wrong, and you know that, you have some resilience and some, you know, alternative rails that allow you and your fellow citizen to pay. Those are the arguments I think will win the support of the people.
Speaker 12
Thank you, chair. And thank you, Mr. Cipolloni, for joining us again for the next stage of our discussions. It's sometimes been tricky having a debate here in the parliament, but we will start out with the best of intentions. Now, as an important topic, something we've talked about before, I asked Madam Lagarde about this, and she said it was a technical matter. So I imagine you have the answer in that case.
I want to talk about interoperability. It's absolutely crucial for us and for banks who will be managing the future digital euro. And there's a difference of opinion between the private sector who believe that we're using a standard and existing infrastructure will be the best solution, whilst the ECB seems to believe that, yes, we can reuse certain bits of the infrastructure, but a lot will have to be built from scratch, new standards, new infrastructure in order to ensure interoperability, resilience, and strategic autonomy. I'd like to know what, in your opinion, is missing from the current system. What could we not do in order to ensure the success of the digital euro?
Speaker 13
And what new standards are necessary? It's a technical question, yes. It's also a financial question. We want to optimize the costs for this substantial project. It's an ambitious project, and I'd be interested to hear your answer to those questions.
Thank you.
Speaker 2
Indeed, it is. First of all, thanks for this question. Indeed, it's a technical, it's a very technical question. Let me go in peace. Let's get some specific examples.
Maybe an example will help us to understand better. Right? You know, we have been very supporting and always encouraging the private sector to try to expand at the European level, right, to scale up at the European level because this is essential. We, I mean, payment system has been for many years a collaboration between private and public sector, and what we are trying to do here is to replicate this in this new age. Now we have many private initiatives.
There is they are trying to expand cross-border, for example, by interlinking or interoperability among themselves. But this solves only part of the problem. Let's take a country that I know best. There is a very good payment system. Chip works well, but works only for retail payments at the physical shop.
Now if they want to expand for the online so that, you know, they can also serve me for ecommerce, they need to develop their standards to do that. Or another country, for example, where you have a very efficient system that works very well online, but they want to move into a physical shop. To go to the physical shop, they can use the existing standard, but those existing standards are proprietary standards and offered by Europeans. Or they can develop alternative standards. But if they do and they use those standards only in that country, the solution will be limited to that.
Now imagine a completely different solution, which because of the fact that the digital euro is a legal tender, everyone in Europe will have the same specific standard. This means that all the possible providers that adopt in their solution the same standard can sell their services throughout Europe without the need to specify that the specific standard for this, for the specific market. So first question, why do we need a new standard? Because the standards that we have now either are fragmented or are not European owned. And if you want to use them, you need to pay.
And someone can say one day, you don't. You don't use it anymore. So in terms of resilience and possibility to scale up at the European level, we need our own standards. Let's get to the point that you are saying, we have the infrastructure. I know what you are referring to.
People are saying we have the infrastructure. You are referring to the fast payment system, in particular to TIPS. TIPS is constructed for commercial bank money. We are talking here of a different product. We have said from the very beginning, the digital euro is the equivalent of cash on a digital rail.
So two completely different products. So you cannot mix the two. And there is one additional problem. Because of the tension that we have and the, you know, geopolitical risk, I think we think it's not a bad idea to have some resilience in the system by providing this alternative rate. Now, and this is part of the conversation that we are having every day with the banking sector.
For the banks to initiate a payment through the digital euro or through TIPS shouldn't be much different. And this is exactly the discussion we are having every day with the banks to see how we can construct the, you know, the flow of the information in order to reuse what the bank have. But those are very technical discussions that we need to be taken at the proper level. What I can tell you is that the political will and the determination, the message to the team is sit together and try to reutilize whatever can be reutilized with some red line. The red line is that the digital euro is a different product than commercial bank money.
It's central bank money. And it's a liability of the central bank, and therefore, the settlement has to be done on the central bank ledger.
Speaker 14
It's good to see you again, even though your hair is gray by now. To be honest, I think we're in the middle of the negotiations, so I don't necessarily want to, you know, touch so much on the general concept or, like, the open questions that are currently there. I think we will continue our discussions internally. So let me just ask something about what you have said, which is the co-badging and the innovation part of it. And I was just wondering if you could elaborate a bit further how the DigiEuro settlement product would work as an infrastructure for other private sector solutions to be working on.
That would be my first question. Like have you also already heard interest from potential future payment service providers that want to base themselves on the settlement infrastructure that the ECB would be providing with the DigiEuro settlement product? And second, for the co-badging, this surprised me a bit. So you would allow someone like Bizum or others to basically co badge a card that I get from my Spanish or German bank, and then it would choose in Spain to use the Bizum settlement infrastructure, and it would use the DigiEuro infrastructure in Croatia. Isn't that a slightly confusing approach to how things would work?
I would just want to maybe ask what this co badging would actually mean. Thank you very much.
Speaker 2
For the second question, which is very important. The logic of the co-hedging is the following. Your bank, which belongs to a possible scheme, provides you with a payment solution. But this payment solution is accepted only in the merchants that are part of the scheme. So if I am not a client of Bidzoom, the Bidzoom solution will not work in my shop, which means that if the person that holds the Bidzoom solution wants to pay in my shop, he has to use something else.
Normally, they use a debit card from a non-European solution. Or you might have an alternative solution. Probably, if you have a debit card, you'll see. You will have the logo of your bank, and then underneath, there will be the logo of one of the other two international cut scheme. How does it work in concrete?
Working this way. You go and pay. Now the machine, if the machine recognizes that if you don't belong to the circuit of BISOM, the payment switches to the international card scheme. So you have the illusion to be paying with the, say, Bankomat or any other solution, but in reality, the payment is going through the international card scheme. You can do the same exactly with the digital euro.
You have one solution, and you pay. Whenever for the merchant that would accept what belongs to your scheme, you go through the domestic scheme. The merchant that do not belong to the scheme, they go through the digital euro. But for the client, it's completely neutral. You don't even realize which rail is going to be used.
The advantage is that when you pay with the digital euro in a merchant that does not belong to the scheme, your bank will get anyway the interchange fee, but they don't have to pay the scheme fee to the international CAT scheme. And that's the big advantage because those key fees are pretty heavy. I don't know whether to answer to your question. Essentially, what I'm saying is that the solution is that you have one single solution that is in different, it's neutral for the client. The rate that will be used depends on the rate that will be accepted by the merchants.
That's the way they work today. So on the rates, what I'm trying, I can reiterate what I said. The big advantage is what we are saying is the fact that the providers, the payment providers in Europe, we left one single standard for all Europe. So they don't need to specify or adhere to a single standard depending on the market. And many PSPs are very interested in that.
But that's the part that they will be reusing. Then I can go on and discuss the way in which the PSP will connect to our central unit, and we are trying to reutilize the system that we have, but those are very technical questions, issues.
Pasquale Tridico
Thank you, madam chair. Thank you, Mr. Cipollone. I would go a little bit deeper because we are doing negotiation, quite an important step ahead. So I would go a little bit on two issues, which are a little bit technical, in order to clarify some important points, which are still going to be clarified in the meeting that we are having. In the current situation, there is a tendency, at least by some, to consider the offline digital euro as a fully independent non-account based bidder type instrument operating entirely without any central settlement infrastructure.
So from the ECB perspective, would such a clarification reflect the original design of the digital euro or the offline functionality, rather be understood as a part of a broader system architecture where there are some functionality. And, like, onboarding funding, the funding system level software continues to play a role, in fact. And the second issue would regard the issue of proximity for the offline digital euro. In the ECB and commission technical work, offline functionality has constantly been associated with proximity payments, notably as a key element in managing the risk profile of the system. Could you clarify whether this element should be seen as a core design feature of the offline digital euro or as a flexible offshore that could be even expandedly?
Speaker 2
So let me answer to your two first of all, thank you for those two questions, which are very, indeed, very technical, but very important. So the offline solution versus the online solution. When we started to discuss this issue, we were thinking how to solve one fundamental problem, which is to provide Europeans a robust, resilient payment system, which would also provide people the possibility to pay with the central bank money and by that increasing the resilience of the system. So we immediately thought that at the center of this project, banks should remain at the center of this project, all PSPs, for several reasons. Being a payment system, you still need to account for some important issues.
For example, the onboarding of people. For example, the AML. For example, the fighting the financing of the terrorist. So the online solution was the immediate, the immediate solution we had. In any case, if you pay people that are not immediately close to you, you need to have some sort of connectivity anyway.
On top of that, though, we thought that we could provide an additional solution, especially to cater for those opportunities for those situations in which you did not have connectivity, meaning that you're not connected to the Internet or you might not have electricity. So the offline solution was complementing the online solution, but the system was thought to be, you know, one unique solution. Me give you an example. If you have the offline solution, you still need to onboard the client. How do you know the identity of these people?
I mean, you need to do the checking anyway. So the fundamental, so the system was meant to be one unique system with different features from the very beginning. The proximity issue. I honest I am have time to understand how can you do an offline payment. Offline means that you are not connected to the network.
You are not connected. How do you make a transfer when you are not connected? I might, I mean, I might need to talk to my engineer. They might explain it to me. But there is something deeper than that.
One of the concerns we have is that, you know, we mentioned before about financial stability. People might be afraid that people take the money out of the banking sector and put it in the portfolio, in the wallet. Now imagine that you have just one solution, the offline solution. You would make the problem even worse because since I cannot refund refill my wallet constantly, for precautionary reason, you would load your wallet with as much as you can so that you avoid what Tobin used to call the shoe cost, the fact that you have to go and refill your wallet. So we would give an if the only way to pay would be as an offline solution, you would give an incentive to people to load as much as they can into the wallet, making worse the problem of disintermediation of the banks.
Moreover, there is a more suppose that we restrict people to use just the offline solution. To me, going back to the question about freedom would be a strange solution. We would restrict people the way people can use their money. They can use their money only with this payment. And because of AML reason, you cannot pay as much as you want, obviously, because you cannot, I mean, if you do an offline transaction, which by definition is not controlled by anyone, you still need to have some AML cap to the transaction.
So we would restrict the amount people can process through the offline solution unless we found a different solution for the AML control, which at this point in time seems to me is still to be found. So to make a long story short, we thought a long time how to construct this whole project. The combination of online solution and offline solution seems to us the most reasonable solution, which at the end of the days doesn't seem to be only our opinion because the commission and the member states, the unanimity of the member states decide that is a good solution. In fact, that's what they supported in the general approach.
Siegbert Frank Droese
Thank you, madam chair. Mister Cipollone, thank you very much for coming. You keep trying to sell us the digital euro as something modern, but people in Europe have the right not to be modern if they want. We think this is not necessary. We think it is a huge monetary experiment that could have serious consequences for data protection, freedom, anonymity, and people's assets.
Alternative für Deutschland, my party, is getting ever stronger in Germany. And I can tell you that if we win power in 2029 in Germany, we will not be having a digital Europe just for the sake of the minutes. With the AfD, there will be no digital euro. Now, my question. The legal basis of the digital euro is based on Article 133 of the TFEU, measures for the use of the euro as a single currency.
At the same time, the digital euro actually includes far-ranging issues that affect market acceptance, will have an impact on banks and intermediation, raises questions of data processing and data protection. So would you agree that all of these individual elements would constitute something that goes beyond the mere deployment of a single currency and actually would involve some conflict of competencies that go well beyond Article 133?
Speaker 2
Obviously, if I'm speaking to you now, I disagree. I think that we have a very legal base that has been assessed by the legal services of the commission of the ECB and of the European Parliament. We have very good people on this three-legal, I mean, council. So I think we have a solid legal basis. But let me, if I may, you mentioned several things like disintermediation, freedom.
I think I already answered to that. But there is one point I really, it's really important, and I would like to stress in this, is privacy. The way we are constructing the digital euro would guarantee the highest protection of people's privacy that a payment system can provide, given the current technology, for two reasons. First, we said the offline solution. When you pay with the offline solution, it's like paying with cash.
Nobody knows your transaction. Second, for the online trans for the online solution, the ECB will not see who is paying whom. What we will see are just code, and the connection between the codes of the identity of people is in the hands of your PSP, your banks, the banks that you trust. This is the design. We have been very transparent on this.
This is the design. Then you can believe in it or not, but this is the design, and we cannot deny the reality. Then, you know, we can but this is the reality. The connection between the code of who pays and the code of who is the payee will not be known by the ECB. The ECB will not only code, the connection between this code and the identity of people will rely we stay with your PSP.
So, and as I said, the offline solution offers a solution that has been, is as good as cash. And speaking with cash, because sometimes I hear that the ECB wants to remove cash. This is another point I would like to make. The ECB has been the most vocal in protecting the people's freedom to pay with cash. We have been calling to rest to reduce as much as possible the exclusion restriction for the use of cash.
And moreover, as you might know, we are redesigning a new series of the euro that we will launch soon, and the design context is the right is going on right now because we want to issue a new series of euro. So I think that we are showing that we are committed to provide people with the means of payment that they want to use to pay.
Speaker 7
Thank you. Second round of question, one minute for the question and two minutes for the answer. And I will start with Marco Falcone for APP.
Speaker 19
Thank you, Chair. I am going to speak in Italian. Thank.
You, Mister Cipollone. We're following with great interest what you're doing here and the line of the commission and the council on this, which are backed by the different finance ministers of the different countries who have all backed this line you're taking. But there are some doubts too that need to be cleared up. The first concerns the building of the technological infrastructure for the digital euro, which will entail excessive costs for banking intermediaries such that they won't be able to recover that from their income from the system. Now if we take, if we want a solid, speedy, and smart payment system, we need to see advantages to it.
Speaker 20
And what advantages will there be for the merchants for small payments in terms of covering their costs?
Thank.
Thank you for your question.
Speaker 2
We have said many times we have done an assessment. You know, about one year ago, there was an important company that issued an estimate of the cost for the
Not the banks.
Speaker 2
For the banks to implement the digital euro. And the original estimate were 18 billion in five years. Then we looked into this getting using the same basic assumption that the private that this company used. And we corrected some assumption, and we worked again on the numbers. Numbers.
And when you look carefully to the numbers, we went up with an estimate of the cost, which is between 4,000,000,000 and, say, 6,000,000,000 in five years. So a much lower estimate. Why such? Because the original study assumed that every single bank in Europe, and there are 2,200 banks in Europe, would implement its own solution for the digital euro, but that's not the reality of the market. Let's take an exam, an Italian example.
Right? We have two small bank groups. Right? The BBC. It's not that every single bank will implement.
They have one provider for, like, 400 banks. So they implement once at the central level, and then they distribute. So the cost is not, you know, it's just for one implementation. But if you apply this logic at the group level, you see that the cost goes down. So at the end of the day, our estimate is that for four years, banks would spend between 1 and 1,400,000,000.
This is just to give you the size, it's about 3% of the running cost for the IT system in Europe. So it's not a huge cost. But you are right. Still is a cost. And the merchant, the banks, everyone need to be rewarded for the work they do.
So the compensation model provides that the banks will get the interchange fee without paying the scheme fee, and therefore, will recoup their cost. But especially for the merchants, the agreement that they reached at the member states at the council foresee that there is a cap to the merchant fees, and this cap will benefit especially more small merchant. Our estimate is that more merchants will pay about half of what they pay today for the services provided to accept digital payments.
Speaker 21
Thank you very much indeed, Chair. I'll be speaking French. Thank you, Mr. Cipollone, for your opening comments and for joining us here today. Digital Europe is a political choice, and, of course, my political group fully supports it. This choice was designed to ensure that Europe retains control of its currency in a digital era.
Now, as our chair said, we find ourselves in a situation where we are dependent on others. You talked about freedom, but there's also issues of sovereignty which are at play here, and the digital euro is a way of tackling that. I have two questions. The first of these, when I talk about the dependence, is the timetable for when the digital euro would be launched. You mentioned that.
Where do you think we can move forward quickly, where you don't envisage any problems? Where are the knee problems that you have identified which could slow down the launch? And then another question, which might seem quite broad, but I wanted to mention when we talked about the timetable in 2029 and sovereignty, how can we tackle the threat? And does this form part of the ECB's toolbox?
Speaker 2
Thank you. Thank you for this question, which is very important. So there are two dimensions to this question. One is the technical one, where we are implementing what needs to be implemented in order to be able to launch digital euro with the timetable we have, we are foreseeing at the moment 2029. So far, everything is going smoothly and on time.
So the internal preparation is going very well and on time. There is another dimension to that, which is the big uncertainty, which is, you know, the digital euro will not live in its own. It needs a regulation. And the regulation is essential because it would allow us to complete the design. Just to give you an example, how many accounts people might have.
You know, if we don't have this final answer, we cannot finalize the design. So this is just to give you an example. But there is a more important issue with this. Why do we need why having legislation in place would accelerate the benefit of the digital euro even before the digital euro is in place, and this has to do with the standards. I said in my opening statement that we are about to announce which standard will be used for each use case across Europe.
If the merchant know that the digital euro is coming, they will start to implement this standard early on. They will not wait for 2029 to deploy the standard at the machine level. They will embed it early on, which means that early, much earlier than 2029, the acceptor network I was referring to will be available for the private sector to use it. If Bidzum wants to go to the point of sale, at the physical point of sale, and they know that the digital euro will arrive in two years, they will adopt the same standard. The merchant in Spain will adopt this standard, and therefore, bids will not depend on foreign solution early on.
So what can you do? Give us the legislation as soon as possible.
Speaker 22
Thank you, chair. Mr. Cipollone, I agree with you that Central Bank money is a public good. You mentioned 2,200 banks, but we have 450 million citizens. I got elected not by banks, but by the citizens.
I know there are some politicians who take money from banks. I don't. So you if citizens pay with cash, then usually they cannot be charged fees. You said that the euro system will not charge scheme or settlement fees, creating savings that can be distributed among banks and merchants. But what are we doing to make payment cheaper for our citizens so that they will voluntarily demand euro, so that they are not afraid they're going to be forced to use the digital euro by driving out cash?
You convincingly argued that banks don't need deposits to, for example, lend because they just want deposits by private households to safeguard their profitability because they pay less to private people in fees and in interest rates than they have to pay if they borrow from other banks. Thank you. So the question is, why are we so afraid to create a little bit competition for the banks, make payment cheaper for our citizens? That's exactly what the Brazilian Central Bank did.
with this.
Speaker 2
Okay. No. Thank you for this question. First of all, you know that people already today, they don't pay. I mean, when you go, you are not charged for paying with any of these solutions.
So this problem at the beginning, but there are hidden costs. You know? It costs some money to have a debit card from other non European. This depends very much from bank to bank. But to go to your point, I think there are two elements that, at the end of the day, two channels through which the digital euro will benefit also financially people in Europe.
The first is exactly the competition issue you were making. Because the digital euro will provide standards, the standards are like a public rail. So even a small merch, a small PSP, a small innovative company can use this rail without paying, well, a penny and compete to provide payment services throughout the euro area and can do that and scale up very easily because they don't have the fixed cost of constructing their own acceptance. So this is the competition at the service provider level. Second, if we reduce the cost for the merchants, the competition among merchants will make sure that some of those benefits will be felt also when you go and shop.
Those are the two channels through which competition will make people better off in Europe.
Speaker 2
No. I mean, we said many things today. I want to again thank you. I know this is a very difficult file, very complicated, many technical dimensions. There are political dimensions.
I just want to ask you to make an effort to find a solution because this will help Europeans, first of all, to become more resilient, to become owner of their own destiny. We are not working just at The U for the dig, you know that the ECB is not just working on this specific file of the digital euro. We are also working very hard on what you have asked us to do several times on the wholesale part of the project. Overall, what we are doing is moving the supply of money into the digital era, and we are doing that on all fronts. The digital euro is a very important piece of this because we would reassure people that they will be in charge of their own destiny.
Help us deliver on this. Thank you very much.
Speaker 1
Thank you, Mr. Cipollone. Thank you very much for your very clear message, and I hope that it got across. Thank you very much for having had the patience to answer many questions, some of which were put to you repeatedly. But I think it was good to hear the answer again. And thank you for this new information that you have given us, which helps us to move forward.
I was listening very closely to what you said, but I've also been carefully taking note of what you said about merchants and so on in response to Mr. Falcone. But anyway, the next exchange of views on this subject will be held on 06/03/2026. And in the meantime, the European Parliament will, of course, be working, moving forward, and delivering. Thank you very much.
Speaker 26
Okay, colleagues. We are moving to the next point on the agenda. Let's see if it helps, but it doesn't seem to be the case. So we now turn to the draft Econ opinion on the Single Market and Customs Union program. This program integrates four programs under the current MFF, notably the fiscalist program, which finances cooperation between EU tax administrations.
Speaker 25
It will also cover the development, production and dissemination of European statistics. As these elements traditionally fell under ECON competence, we have asked to submit an opinion to the report of the INCO committee, which is in the lead for this file. The draft opinion was circulated to Econ members on 03/10/2026. And now I give the floor to the reporter, who is Gilles Boire, for six minutes. Gilles, please.
Speaker 12
Thank you, chair. I'm presenting my draft opinion with regard to the single market and customs program for the period 2028 to 2034. It's all, of course, happening in the context of the simplification that the commission is trying to achieve. And I would like to begin by recalling that I fully support the commission's ambition for streamlining and rationalization, but I wanted to strike a fair balance between increased flexibility on the one hand, and the need to preserve robust guarantees in terms of transparency, accountability and democratic scrutiny on the other. Flexibility proposed here, in particular, the possibility of redeploying funds between priorities and adapting to new needs, is vital to ensure that an efficient use can be made of the union's resources.
But this must not be at the expense of the role of our parliament to exercise democratic scrutiny. And the proposal doesn't give sufficient guarantees for this. So I have tried to significantly strengthen guarantees in terms of monitoring, reporting, and evaluation. In particular, I propose that the work programs clearly identify priorities, define implementation trajectories, and state measurable criteria to measure success and measure results. So I want a more thorough evaluation with a midterm review after three years following the launch of programs, also a final evaluation, as well as systematic forwarding of the results of all of this process to the European Parliament so that effective political control can be exercised.
Because, of course, this is the opinion of our committee. I gave particular attention to the tax and statistical elements of the program. The merging of the fiscalis program into a broader instrument can be understood in the light of simplification. However, this must not lead to any watering down of a program that has proved its worth and furnished substantive results in terms of increasing tax revenue. So I tried to clarify and strengthen these tax aspects, restressing the aims and also setting out tax priorities more clearly, support to tax administrations, improvement of tax revenue and recovery, strengthening of administrative cooperation, and the fight against fraud and tax evasion.
I also stressed the importance of fully and consistently implementing international agreements, in particular, the OECD BEPS agreement pillars one and two. This requires uniform implementation. And if not, there would be a danger of fragmentation and a loss of tax fairness, and fragmentation of the single market. We want to make sure that simplification doesn't simply mean dilution of priorities, nor do we want there to be any loss of powers of control and scrutiny. We want to make sure that we can have more transparent, effective, and accountable European policy in these areas.
But of course, I'm very ready, colleagues, to continue the work with you, and I look forward to hearing your comments and your input. Thank you.
Speaker 25
Thank you. And now I will give the floor to the shadow reporters for 3 minutes each. And let's start with EPP, Ms. Angelika Winzig.
Speaker 27
Yes. Thank you, Chair. Thanks to our rapporteur, dear colleagues. This program brings together a wide range of instruments from the single market to customs, taxation, and antifraud. From an income perspective, this combination makes sense, but it also requires clarity on priorities and responsibilities.
Let me highlight three points. First, on taxation, strengthening cooperation between member states, improving data exchange, and tackling VAT fraud are clearly the right objectives. The focus now should be on making this cooperation work in practice and deliver real results. Second, on the protection of the union's financial interests, better tools to fight fraud and improve cooperation between the authorities are necessary. But here as well, the balance matters.
Tools must be effective, but also clearly defined and especially proportionate in their scope. Third, on governance and funding, bringing different instruments together can create synergies, but it is also increasing the need for transparency and clear prioritization. Flexibility must not come at the expense of accountability. Overall, this program gives us a real opportunity to strengthen the functioning of the single market, which is essential for our SMEs to grow and compete. From my side, the focus is clear: efficient cooperation, strong safeguards and respect for the existing balance of competencies.
Thank you.
Speaker 25
Thank you very much. And the next one is Mister Papandreou on behalf of Ms. Pankova from the group. Please.
Nikos Papandreou
Thank you. Yeah. On behalf of Ms. Pankova, this is what she's written. First of all, I would like to congratulate the rapporteur for the constructive work on this important file, and I look forward to fruitful cooperation.
The proposed program for 28-2,034 is a key instrument to support the functioning of the single market. It brings together several crucial strands, from taxation, cooperation and competition enforcement to statistics, financial services and anti-fraud. For the S and D, the priority is to maintain a strong and fair single market that delivers for citizens and businesses alike. This means ensuring effective implementation and enforcement of EU single market policies, tackling fraud and tax evasion, and supporting public administrations in making use of synergies in the programme, given that multiple programmes have now been brought together into one single instrument. From an econ perspective, we give particular attention to areas such as fiscal, EU statistics, competition policy, and financial services.
These are not marginal elements, but they are central to safeguarding revenues, ensuring compliance and a level playing field, enabling evidence-based spending, and ensuring that financial services are accessible for all. Overall, while the consolidated program increases flexibility, our assessment is that it does not sufficiently explain how the core functions will be prioritized. It lacks clear implementation plans and does not require a work program to show that it meets EU policy needs. The draft opinion goes some way to addressing these concerns, but there is much room for further improvement. We need clear objectives, more transparency, and better-defined safeguards and implementation tools.
Flexibility can be useful, but it must not hamper accountability or allow key priorities to be diluted. In this context, my work as shadow repertoire will focus on three points. One, strengthening the clarity and measurability of the program's objectives. Two, emphasizing the need for clear criteria and proper monitoring and oversight of budget reallocations. And three, protecting core econ priorities within the program such as fiscal, EU statistics, competition policy, and financial services.
Thank you.
Speaker 25
Thank you very much. And the next speaker is Tomas Kubin from the PFE Group. Please.
Tomáš Kubín
Thank you, Chair. I'll speak in the Czech language, so use your headset, please.
Speaker 29
Functional and resilient single market is one of the greatest assets of the European Union. That's why we need to be speaking about how to modernize it, how to adapt it to the digital era, and how to bring in synergies. Generally speaking, the goal of the European Commission for 2028 and 2034 is a good idea. But we have to ask the question whether this will really bring all the positives like accessibility, administration burden that would be reduced, or whether it would do the contrary, and that would limit flexibility for member states. As for allocations, we think it would be more transparent to see those amounts in the regulation, which is what happened in the current single market programme.
Then I have certain doubts about statistics being part of the single market program. I think this may bring problems when it comes to independence. And we had one hearing here in this committee about the very same problem. And we don't think we should be mentioning an authority, a market surveillance authority, which is something that does not exist yet. And it's a question whether we should establish an authority like this, and what powers it should have.
Now on the draft, I'm happy to see that VAT fraud is there now. I'm happy to see the new article about cometology. I think it's a very good thing to bring in member states' experts, and they need to be kept updated. We also think that it's very good to see competitiveness here. I am quite skeptical about the EU value-added condition here.
I don't think it's the right place, in fact. And if it was indeed part of the draft, I think it might discriminate some member states, which would sometimes find it difficult to prove it. Generally speaking, I like the draft, and I'm looking forward to our cooperation.
Speaker 25
Thank you. The next speaker is Maria Theresa Vivaldini from the ECR Group. Please.
Présidente Collégi
Speaker 31
Chair, colleagues, I'd like to thank rapporteur Boye for his work. Today's proposal is part of a broader package for the MFF and provides for a more integrated architecture for the merger of four programmes into one. The purpose of which is to further harmonize governance of the funds in order to facilitate them and make allocation easier going to the necessity. We think we need a bureaucratic streamlining and speeding up of the actions. We need to implement regulations already in force rather than the creation of new agencies.
We also think it's key that at terms of the drafting of the amendments and at the negotiating time, we need to look at the question of transparency. The four budget lines being merged into one meant to promote efficiency, but that could have a knock-on effect on transparency and programmability. So putting market surveillance in a multifunctional budget line means that the funds would now be allocated to specific tasks, and there's no clarity as to which part of the budget would be effectively drawn upon for this activity, with the risk that there wouldn't be proper support for fundamental priorities such as the market surveillance supervision authority. But I, congratulations to the rapporteur, and I look forward to working with you in a constructive spirit. Thank.
Speaker 25
Thank you. And now I invite Miss Agni Arasa, head of unit for the management of programs and EU training at the European Commission, to take the floor for one minute, please.
Speaker 33
Thank you, chair, for the opportunity to take the floor, and thank you to the rapporteur, Mr. Boye, and also the rapporteur for the important work done on this matter when considering the taxation and statistics related parts. We appreciate the support to the overall objectives of the commission's proposal for a single market and customs program, which aims to consolidate four funding streams into a coherent action framework, leading to further synergies and aligned with the EU policy priorities. The proposed program with its simplified, flexible, and agile design will contribute to making the single market and customs union more competitive and resilient while protecting the financial and economic interests of the union and its member states. Regarding taxation, which is key for a strong and competitive single market, the proposed program will be instrumental to continue funding the digitalization in support of the taxation policy priorities, and also the key cooperation, data exchange, and capacity building networks between taxation authorities and also other authorities. The embedded budget flexibility would allow to preserve the ability to react to any future evolving needs.
Speaker 32
At the same time, the proposal recognizes the imperative for continuous funding as the bulk of the program's budget will indeed be used to fund legally mandated activities. So the commission remains committed to engage, as needed, with the European Parliament in the context of the internal institutional negotiations. Thank you.
Speaker 25
Thank you very much. And now I give back the floor to the reporter for one minute, please.
Speaker 12
Well, thank you to all my colleagues for their contributions and comments on this draft report. I'm looking forward to seeing their amendments. By April 9, that's the deadline we'd set. And I'm sure we'll be able to find some good compromises on a topic, which I think we all seem to see eye to eye on. Thank you very much.
Speaker 25
Thank you for the discussion. The deadline for amendments is 04/09/2026 at 06:00, and the vote in Econ is scheduled for 06/03/2026. Thank you once again. And now we turn to item five on the agenda, which is the presentation of the draft report of reporter Michalis Hajipantella on the access of the European Public Prosecutor's Office and the European Anti-Fraud Office to value added tax information at union level. It is encouraging to see that this proposal closely reflects the European Parliament's priorities as established in the VAT in the digital era, the so-called VIDA report, where I had the opportunity to serve as a shadow reporter.
The reporter for the opinion has put forward a number of additional amendments aimed at further strengthening the fight against intra-community VAT fraud while ensuring, of course, robust data protection safeguards. By aligning access for EPPO and Olaf with their operational needs, limiting and targeting data access in line with EDP's recommendations, and highlighting the importance of adequate resources for secure and effective implementation. And now I give the floor to the reporter, mister Hajipantala, for six minutes, please.
Michalis Hadjipantela
Thank you, Chair, dear colleagues. Cross-border VAT fraud continues to cost the European Union billions every year. Strengthening cooperation between our enforcement authorities is therefore not just a technical exercise, but a clear political priority. This proposal is an important step forward as it improves access to VAT information and strengthens structure exchanges, in particular through EuroFisc. Let me begin by underlining that in preparing this report, we engage extensively with key stakeholders.
We held dedicated meetings with the European Public Prosecutor's Office, the European Anti-Fraud Office, and the European Data Protection Supervisor. Our objective throughout was to carefully consider their input and expertise, and to reflect it where appropriate. In particular, we have taken into account the recommendations of the ETBS in order to ensure that the final text strikes the right balance between effectiveness in fighting fraud and full respect for the data protection principles. Turning to the substance of our work, the most important set of amendments focuses on data protection and proportionality safeguards. First, we clarify, including in the residence, that access by the APPO to the VAT information is limited to criminal law enforcement purposes in line with its mandate.
Second, we specify the main categories of data that may be accessed, such as VAT identification information, intra-community transactions, and certain payment data, while providing for further specification where necessary. This ensures alignment with the principles of necessity and data minimization. Third, we introduce strong safeguards to ensure that access is limited to what is strictly necessary, linked to a specific investigation or prosecution, and designed in a way that prevents untargeted searches. In addition, we reinforce accountability and traceability by requiring that each access is attributable to an unauthorized user and locked in a way that allows effective x post verification. We also strengthened the provisions on information sharing by Eurofisc by ensuring that only the information strictly necessary is transmitted to allow EPPO and OLAV to assess whether to act within the respective mandate.
Furthermore, we address the issue of resources. We remove the provision that would place the cost solidly solely on EPPO and OLAF, and instead underline the need to ensure adequate financial resources to support the infrastructure and technical means required for secure and effective access. Overall, these amendments aim to ensure that we reinforce the fight against cross-border VAT fraud while guaranteeing that access to sensitive data remains targeted, proportionate, and fully compliant with the European Union data protection standards. Finally, let me briefly outline the next steps. The deadline for table in amendment is on April 9, followed by the consideration of amendments in Econ and Fisk on May 5.
We aim to adopt the report in committee on June 3, with a plenary debate and vote for Sunday July 26. I look forward to working constructively with all of you in the coming weeks to deliver a strong and balanced outcome. Thank you very much.
Speaker 25
Thank you. Now I give the floor to the shadow reporters for three minutes each, and I will start with Miss Tavares from the S and D group.
Speaker 37
Thank you, Sherdir, colleagues. I will speak in Portuguese. And first, two thanks to my colleague, reporter, for the work in this file. Sorry.
Speaker 38
Now VAT fraud is particularly pertinent, as my colleague has explained, because we're talking about tens of thousands of euros which are putting member states at risk in an area which has a direct import impact on the union's resources. We know it's one of the main sources of revenue for the MFF, which we're discussing at the moment. So that makes this work particularly relevant now. Now looking at the Commission's proposal, I think it's heading in the right direction. It's allowing quicker and more centralized access to the existing information.
Today, dependent on bilateral agreements means that investigations are fragmented, and this permits a great deal of fraud. In the committee here in the parliament and in the budget committee as well, we have often worked very closely together with EPPO and OLAF, and we've seen these cases come up time again. Are they up for discussion and for consideration here in the parliament. So in S and D, I salute the work done so far, our amendments will simply contribute to ensuring institutional balance between the PPPO and OLEF. And also, we want to support and reinforce the procedure.
Speaker 37
Now, on an administrative level, that's where Olaf should be working. On a legal level, you have the EPPO. They're both working together to protect the financial resources of the European Union. And this is of ever-growing importance. There are three main areas which we think are the most important.
Speaker 38
First of these is, as I've already said, this is the interaction between EPPO and OLAF, and the way they manage data. We have to look at how this works with particular cases and avoid any generalized use of data. We want to guarantee robust protection of data and scrutiny. We have clear requirements signing up to verification, exposed verification, liability. And then the other point is related to looking at the role played by Olaf and the scope of activity, because I think in many member states, and this is something we've raised several times in this committee, we have to look at the role they play.
I think this is a real opportunity to state once again that Olaf's role is absolutely crucial in member states when protecting the financial interests of the union. Finally, last but not least, it is important for this work to be done, but we have to reflect on the human resources and financial resources, which go with accompany to this process. Are of equal importance. Thank you.
Speaker 25
Thank you very much. The next speaker is Thomas Kubin from the PFE Group.
Tomáš Kubín
Thank you, chair. I'll speak in my mother language again, so please use your headsets. VAT.
Speaker 29
Revenues represented more than 15% of total revenues in the EU. Despite this, tens of billion escape in because VAT is not collected, administrative fraud, administrative errors or carousel fraud contribute to this. The estimates are that carousel fraud itself is responsible for €12,000,000,000 to €32,000,000,000 a year. It is in the interest of taxpayers to improve the collection of VAT. Therefore, I appreciate the proposal of the commission, which is aimed at making more efficient the exchange of information between EPPO and all of the Commission.
At the same time, the sensitive data should be treated in accordance with data protection regulations. I appreciate that the report takes into account the opinion of the data protection supervisor. It aims at ensuring targeted access and making sure that each case of access is linked to a specific investigation and specific investigator, which I also appreciate. I agree with the specification that access to databases must be limited to what is necessary for performing the clear mandate of EPPO, and all of our amendments will probably focus on better targeting of access to relevant databases so that EPPO and OLAF can work better at the same time without sharing excessive data, which is considered exceptionally sensitive. Last but not least, the provision of excessive data should not overburden tax administrations of member states.
The draft opinion is good. I want to thank the rapporteur for the work done, and I'm looking forward to the further debate.
Speaker 25
Much. Mister Zilla is not here. So the next speaker is me. So I give the floor to myself. Let's start with the important aspect that, actually, there are not too many proposals where, if we do it right, we can have a clear value for money.
Money is everywhere. We need to pick it up. And in this regard, I really welcome the commission's objective. As moving away from slow fragmented bilateral cooperation to giving the EPPO and Olaf direct and centralized access to EU IT systems is key to enabling them to see the full picture and effectively fulfill their legislative duties. As I mentioned, these losses are quite substantial and in the order of magnitude of tens of billions of euros.
And this is not just in the interest of the EU as such, but also it is relevant for member states as the vast majority of these evaded funds are stolen directly from national budgets. So this is a common interest of all of us. I would like to highlight just two important issues for us. The first one is the crucial need for resources, because simply granting access on paper is insufficient. To succeed, the EPPO and Olaf must be provided with increased human resources, technical expertise, and dedicated budgetary resources.
The second, which has already been mentioned, is the delicate act of balancing data protection and investigative efficiency. So I welcome the reporters' introduction of stricter wording on data protection, especially the requirement that Eurofisk initially share only information that is strictly necessary. However, on the other end, we need to recognize that the practical impact of these limitations can hinder the efficient efficiency of speed or speed of investigation. So we need to balance the two objectives, data protection on the one hand, but on the other, the ability of these institutions to carry out their work as efficiently as possible. So in conclusion, the draft report goes in the right direction, and we are looking forward to working with the reporter and to find a viable compromise.
Thank you very much. Okay. And the next two speakers, I are not here. So, yes. So I will now give the floor to the counter porter, mister Gilles Boire, for his intervention in three minutes, please.
Speaker 12
Thank you, chair.
I'm presenting to you the opinion of the Contour Committee on this report. I welcome the commission's intention to extend access to the VAT databases to EPPO and OLAF. That's something we've been calling for a long time now. In our view, there are gaps that need to be filled. First of all, we've identified a lack of customs data integration in the context of VAT cooperation.
VAT fraud on import is a systematic problem. It's very hard to detect. And it's on the increase, and it has a direct impact on our single market. Secondly, the proposal doesn't sufficiently fit in with the broader revision of the anti-fraud architecture of the EU, which was promised by the commission last year. We can't continue to fight fraud in a fragmented and sectoral way.
I welcome the amendments tabled by the rapporteur to improve the text. In the Budget Control Committee, we would like to submit a series of additional proposals based on three strands. First, establishing a clear link between this proposal and the revision of the anti-fraud architecture of the union. Secondly, we want to fill the shortfall of customs data according to Article 17 of Regulation 904, 2010, and Articles 29a and 29b to improve access to this data to fight fraud more effectively. And finally, we propose a strong review clause based on results after three years, to measure the effectiveness of this regulation on the basis of OLAF and EPO reports.
And if the results are not good enough, we propose that the commission should come forward with a new proposal. In the view of the Budget Control Committee, this proposal is a first opening towards a more robust and harmonized anti-fraud architecture. And I therefore call on you to take account of our report in your final proposal, so that the report can be a more effective instrument in the fight against fraud. Thank you.
Speaker 25
Thank you. There are no requests for the KHDI procedures, so I give the floor back to the rapporteur for one minute. Mister Hajipantala.
Michalis Hadjipantela
I would like to thank all the colleagues for the comments. I'm very happy that we have a common target to do something good to help increase the VAT, to reduce the VAT fraud, and increase our income. So I'm really looking forward to receiving the comments of all the colleagues, and I'm sure we can do a really good report that we can all be proud of. Thank you very much.
Speaker 25
Thank you so much, and thanks to all for the discussion. The deadline for amendment is on April 9, and the vote in Econ is scheduled for June 26. Thank you. And now we turn to item six on the agenda, which is the consideration of the draft opinion and consideration of amendments to the interim report in view of the consent procedure on a broad package of agreements to consolidate, deepen, and expand the bilateral relations with the service confederation. Let me remind you of the background of the proposal.
The package aims to strengthen and modernize the foundation of the bilateral relationship between the EU and Switzerland, and enhance cooperation across a wide range of areas, including competition, state aid, and taxation. On 06/13/2025, the commission adopted proposals for council decisions on the signing as well as on the conclusion of the broad package. On 03/02/2026, the agreement was signed by the Commission President and her Swiss counterpart. Afed drafts an interim report related to the above consent procedure to which Econ is providing its opinion. I will now give the floor to the reporter, Mr. Markus Ferber, for six minutes.
Speaker 40
You, chair, colleagues. This package sends a major signal on the relations between the EU and Switzerland. It's highly to be welcomed that the negotiations have been successfully concluded. That's good news because more stability, more predictability, more legal certainty in our relations with Switzerland is a win for businesses, for investment, and for cross border economic chains. Switzerland is an important financial market and a closer connection of Swiss and European financial markets, which will open new opportunities for both sides.
Speaker 41
So would it have been even better if there was a specific chapter on market access, but that can be a target for the future. In the meantime, we should continue to approximate using equivalence recognitions. We should also welcome the fact that, in terms of financial services, the process has been renewed. Under a previous commission, this had been suspended, and we can build on this in the future with a view to further consolidating economic relations. This package also relies on a fair and clear foundation.
Speaker 42
And there's an agreement which contributes to the fact that deeper cooperation is based on a balanced foundation, and that's an important element in a good overall package. So in my view, it's a good result. It's politically sensible, economically relevant, and a step forward, a good step forward in the relation between Europe and Switzerland. So we, as the committee, should support this package in a positive way. I would like to thank the Shadow Workers for the constructive amendment proposals and their good cooperation, and I'm confident that on the basis of this cooperation, we can come to a good outcome.
Thank you.
Speaker 25
Thank you very much. And now the pseudo reporters for 3 minutes. I will start with Miss Fita from the S and D group, please.
Speaker 21
Thank you very much indeed, colleagues. I'd like to start by thanking the reporter for his draft opinion. It's a great starting point for our discussions and negotiations. Of course, we cannot consider economic relationships with Switzerland solely via state aid matters, fiscal matters, fight against money laundering, and financial services. All of these have to be tackled when looking at the degree of integration between the EU and Switzerland, because there was a lot at stake.
Strengthening our relations with the country can only be done with solid guarantees to protect the integrity of the internal market and the stability of our financial system. As many of the amendments which have been tabled to this opinion have said, any divergence from the rules in this area will create serious risks of distortion of competition. Now, for money laundering, we need to take a further step forward. We can no longer have informal cooperation. We need structured cooperation with a clear framework worked on between the European authorities on money laundering and the Swiss authorities, leading to an exchange of information and in terms of scrutiny to tackle the ever growing flows of across-border money.
Then on tax matters, I think we're heading in the right direction with the strengthening of automatic information exchange and the new types of cooperation, including recovery of TVA VAT, but we haven't gone far enough. These technical measures cannot replace political commitments to true tax transparency. This means we need a full and effective implementation of the second OECD pillar. Switzerland is committed to doing this, and that's positive news. But do we need to ensure that the application is done fully in line with the EU's values?
Of course, we have to ensure that the respect of the rules of the single market remains at the heart of any changes. This is crucial for us. It's also crucial for Switzerland to set up an equivalent system and for the commission to ensure that regular controls are carried out. We believe our approach is clear and simple. Yes.
We want to deepen our relationship with Switzerland, but we have to have shared effective rules which were applied on both sides of the border. Thank you.
Speaker 31
Thank you, chair, colleagues. I'd first.
like to sincerely thank Rapporteur Ferber and the set of rapporteurs. Switzerland is a very important partner for the EU. It has a high level of economic integration and also of financial integration. And this means we need a strong and up-to-date legal basis. So we support the rationale of the package of agreements and the need to move on from instruments that are now out-of-date.
The strength of the legal basis will facilitate mobile mobility of citizens, trans, frontier shipments, and also improve matters in the energy sector and provide for fair competition. So these are good strategic goals for both partners. We think that such agreements can contribute significantly to strengthening political stability and institutional stability as between the two sides, with a positive impact on economic, financial and fiscal matters. It's necessary too for the principle of mutuality to be respected and that unilateral initiatives are avoided, which might compromise the effectiveness and implementation of the agreements, as has been shown set out in the amendments tables. And I wish good cooperation to all.
Speaker 25
Thank you. The other shadow reporters are not in the room, and I see also no request for the KHDI. I turn immediately to Mister Ferber for his concluding statement for one minute, please. Thank.
Speaker 41
Thank you very much. Thank you for your contributions. I think this will make it possible to come up with a balanced report. This is an opinion for the Foreign Affairs Committee. And I think our colleagues in AFET never have to address these economic issues in such detail, especially in the area of anti-money laundering and so on.
So they would be well advised to take on board our suggestions. But, I look forward to being able to present a balanced report with the help of the Shadow Reporters.
Speaker 25
March, and the vote is scheduled for May 5. Any other business? That's not the case. So, the last point is the date of the next meetings. The next Econ Committee meetings will take place in April here in Brussels.
Thanks very much for the discussions, and have a nice day.
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