EUROPE has obtained a draft proposal from the European Commission to provide the digital euro project with a legal framework. In this document, the digital euro is conceived as non-programmable and totally fungible. The Commission is due to adopt its proposal on Wednesday 28 June. The decision on whether or not to launch the digital euro will remain the prerogative of the Governing Council of the European Central Bank (ECB).
Financial stability
The digital euro should not and will not be designed primarily as a store of value. The draft proposal consulted provides for the European Central Bank to develop instruments, including a capping on the holding of digital euros.
Obligation to accept the digital euro
The digital euro should be given the status of legal tender. Acceptance by payees should therefore be mandatory. However, the draft proposal provides for exceptions, in particular for individuals acting in a personal capacity or micro-enterprises. The document also proposes additional monetary exceptions that the Commission would be empowered to adopt by means of a delegated act.
Distribution
The digital euro should be available for both online and offline payments. Users could use the European Digital Identity Wallet.
The draft proposal provides for the distribution of digital euros to be carried out by payment service providers as part of a contractual relationship with users. Users can have one or more accounts with the same or different suppliers. There will therefore be no contractual relationship between users and the ECB.
The proposal provides for digital euro users to be able to transfer their digital euro payment accounts to another payment service provider.
The ECB should ensure as far as possible that the digital euro is compatible with private digital payment solutions.
Lastly, access to the digital euro and its use in a Member State outside the euro area or a third country would be possible, but subject to conditions.
Fees
Users should be able to access the basic functions of the digital euro free of charge. Some additional features may be subject to a charge.
The document proposes that merchant service fees or fees between payment service providers should be regulated to provide fair compensation and a “reasonable” profit margin for payment service providers, without excessive costs for merchants. The ECB should issue recommendations and could establish a mandatory level for these fees and charges.
Accessibility
The digital euro should be designed in such a way as to make it easy to use for as many people as possible, including those who are financially excluded, have functional limitations or limited digital skills.
Under the proposal, users of the digital euro would not be required to have a non-digital euro payment account. However, some features of digital euro will require access to a non-digital euro payment account.
Confidentiality
The document contains proposals for a framework for the tasks for which the ECB and the national central banks may process personal data (Article 35), while implementing security and privacy protection measures (pseudonymisation, encryption, etc.) The ECB and the national central banks should not be able to directly attribute the data to an identified user.
Anti-money laundering provisions for off-line payment transactions in digital euros
The document proposes that neither the European Central Bank nor payment service providers should have access to personal data relating to this type of transaction. Payment service providers would only have access to financing and withdrawal data relating in particular to the identity of the user and the amounts.
Service providers should transmit this data on request to the competent authorities if there is any suspicion of money laundering or terrorist financing.
The Commission would be empowered to set holding and transaction limits by means of implementing acts.
Link to leaked document: https://aeur.eu/f/7ka (Original version in French by Émilie Vanderhulst with Anne Damiani)