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Euro Digital Currency

June 29 2023

Proposed Legislation Introduces Framework for Digital Euro

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The European Commission has unveiled its legislative proposal, outlining the potential implementation of a digital euro that would be widely accessible and accepted throughout the euro area. This proposal marks a significant step towards embracing the digital age while preserving the esteemed status of the euro as a universal means of payment.

Legal Tender Status and Accessibility

Similar to banknotes and coins, the digital euro would hold the legal tender status, ensuring its acceptance across the entire euro area. The proposed legislation guarantees easy access to digital euros through banks upon request, ensuring inclusivity and leaving no one behind.

Cost-Free Basic Services and Fair Distribution

Under the proposal, basic digital euro services would be made available to users free of charge. Moreover, the legislation encourages private intermediaries to distribute the digital currency by offering them appropriate economic incentives, while simultaneously preventing excessive fees for merchants.

Privacy and Data Protection

Recognizing the importance of privacy and data protection, the proposed legislation strives to maintain a high degree of both for digital euro users. It also addresses concerns related to money laundering and terrorist financing risks. Furthermore, offline digital euro payments are enabled, providing privacy levels comparable to cash transactions.

ECB’s Endorsement and Next Phases

ECB President Christine Lagarde expressed her support for the initiative, highlighting the euro’s significance as a symbol of European integration. She emphasized the importance of adapting the currency to the digital era, ensuring its continued trust and value among citizens.
The investigation phase of the digital euro project is set to conclude in October 2023, following which the ECB’s Governing Council will decide on advancing to the next phase. This subsequent phase will focus on further developing and testing technical solutions and business arrangements. Ultimately, a decision to issue a digital euro would only be made after the adoption of the legislative act.

Safeguarding the Role of Cash

The European Central Bank (ECB) also welcomes the Commission’s proposal, which safeguards the legal tender status of euro cash. This ensures that banknotes remain easily accessible and widely accepted throughout the euro area. Preserving the role of cash in physical transactions is crucial, allowing individuals and businesses to efficiently withdraw and deposit their money.
The ECB stands prepared to offer technical input to support the EU co-legislators in their work. The European Commission has recommended consulting the ECB on the proposed legislative changes, and the ECB will provide its opinion in due course.
The proposed legislation represents a pivotal milestone in paving the way for a digital euro, encompassing the valued features of cash in the digital realm. As Europe progresses towards the digital age, the introduction of a digital euro holds the promise of a more efficient, accessible, and secure means of payment for all.

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European Central Bank | Fintech Finance

European Central Bank
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