The Future of Payments in a DLT-Based European Economy: A Roadmap

Abstract

Distributed ledger technology (DLT) has the potential to address long-standing industrial challenges, remove frictions, build trust, and unlock new value across businesses and industries. It enables decentralization, the immutability of data, transparency, and the automation of business processes. Thereby, it creates a multitude of use cases ranging from energy and manufacturing to mobility and logistics. However, a digitized economy based on DLT can flourish only if it does not merely enable the exchange of assets, goods, and services but also the exchange of money. In other words, there is a need for a payment solution that is compatible with DLT-based decentralized networks and enables transactions denominated in euro. This is particulary relevant in the currently evolving geopolitical environment. Digital payment solutions constitute an important strategic building block in Europe's quest for digital competitiveness and strategic autonomy (Anghel et al., 2020). Various European institutions have increased their efforts to modernize the payment infrastructures in Europe, including the Digital Finance Package from the European Commission (European Commission, 2020) and the inquiry into a digital euro by the European Central Bank (European Central Bank, 2020). Against the background of these developments, we aim to answer the following research questions: What will the future

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