OeNB Chief Kocher Sees Economic Recovery

However, it is clear "that there is a growth outlook in the Eurozone and in the EU area overall that is not very dynamic," says National Bank Governor Martin Kocher. The second half of 2025 could still be weaker than the first, but not as much as originally assumed, said the President of the Austrian National Bank (OeNB) on Monday afternoon to journalists in Vienna.

Economic Situation in Austria Weaker than Eurozone

Austria's economic development is below the European average. While the Eurozone showed economic growth of 0.2 percent in the third quarter this year, it was only 0.1 percent in Austria. The same picture with inflation: In the Eurozone, it was estimated at 2.1 percent in October, while in Austria it was twice as high at 4 percent.

"The main factor of inflation at the moment is service inflation," said Kocher with regard to the entire Eurozone. Depending on the country, food and energy prices also played a major role. The increases in basic food prices are mainly due to the prices of food raw materials, not processing costs.

"There has been little change in inflation in recent months," said the National Bank Governor. This is overall a comfortable situation for the European Central Bank (ECB), "but a distorting one, as the fundamental risks are still there," emphasized Kocher, referring to geopolitical challenges and international trade conflicts. It is also clear that the ECB is and remains as capable of acting as possible should one of the risks "manifest," he emphasized with regard to monetary policy. "There is no clear outlook on how things could continue," he clarified.

OeNB Chief Kocher: Digital Euro is "Cash for Online Trade"

The digital euro is "a major ECB project with a good justification" and is "of course not intended to abolish cash," assured the National Bank Chief. "It's not about an either-or, but about another option - the digital euro is nothing other than cash for online trade."

Additionally, the digital euro is intended to make Europe independent from the USA in digital payments. "Europe must learn that dependencies can be expensive and painful," emphasized OeNB Director Josef Meichenitsch, who is responsible for this ECB project at the National Bank. "In Europe, we have a large dependency on two US companies - Visa and Mastercard. This is the case in most countries."

The ECB wants to provide a public infrastructure and thus make it independent from other countries and providers. Free transactions should also be enabled, and merchants should have to pay fewer fees. "We at the OeNB ensure supply security and choice."

A Lot of Programming Work Needed

The ECB Council in Frankfurt decided on the next project phase. From 2023 until now, it has been about design, costs, impact studies, and holding limits. After the design phase, we are now in the technical readiness phase. "That means we are now programming a lot and providing the technical server," explained Meichenitsch. It takes "a good year or a year and a half of programming time to bring everything together. "All banks must be interoperable."

The OeNB is part of the alliance for the digital euro - six countries are participating, alongside Germany, Italy, France, and Spain, Lithuania and Austria are also involved.

The timeline: the pilot phase is expected in 2027 - depending on the European legislative process. "In 2029, the digital euro should be rolled out on a broad scale because we want to secure the EU's independence." The one-time costs for the project are estimated at 1.3 billion euros, and the ongoing costs are expected to be around 320 million euros per year. According to estimates, the current two payment service providers currently incur costs of 14 billion euros, according to Kocher. "Of course, they won't completely disappear," added Meichenitsch.

(APA/Red)

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