On Wednesday 28 June, the European Commission presented a proposal for a digital euro, the aim of which is to provide a European legal framework for a potential digital euro, should it be launched. Ultimately, it will be up to the Governing Council of the European Central Bank (ECB) to decide whether or not to launch a digital euro. The ECB is expected to complete its investigation phase in October 2023 (see EUROPE 13203/5).
During the presentation of the proposal, European Commissioners Valdis Dombrovskis (Economy that Works for People), Mairead McGuinness (Financial Services) and Paolo Gentiloni (Economy) emphasised the importance of the digital euro project in maintaining Europe’s strategic sovereignty. They also emphasised the need to guarantee access to public money in euros in the digital age. “Could we imagine a future where we only have access to (private) cryptocurrencies?”, noted Commissioner for Economy Paolo Gentiloni.
The European Commission presented a proposal that was very similar to the document obtained by EUROPE (see EUROPE 13203/5) for a non-programmable, fully fungible euro, which would be available for both online and offline payments.
This digital euro is not intended to replace euro notes and coins, but instead to offer a complementary means of payment. On the same day, the European Commission adopted a proposal to clarify the legal tender status of euro notes and coins (see other article).
The digital euro would then be distributed by payment service providers.
It would be available to use for both online and offline transactions as of the first issue.
The intention is to design it so that it is easy to use for as many people as possible, including those who are financially excluded.
Financial stability. The digital euro should not, and will not, be designed primarily as a value reserve. The proposal calls for the ECB to develop instruments, including a capping on the holding of digital euros. However, these instruments should not prevent payments being made in euros.
Acceptation. The European Commission is proposing that the digital euro should be given the status of legal tender. Recipients of payments, with certain exceptions, would be obliged to accept it. However, there are a number of exceptions. For example, a small business could refuse such a payment method if it instead offers comparable alternative payment methods. Individuals who are engaged in purely private activities would remain free to refuse this means of payment.
Costs. The European Commission has proposed that the basic functions of the digital euro should be free of charge. Some additional features may be subject to a charge.
In its proposal, the European Commission also seems to be seeking a balance between fair remuneration for payment service providers and costs for merchants who would be the recipients of this method of payment.
Protecting privacy. The proposal also looks to strike a balance between privacy and the need to combat money laundering and terrorist financing.
The ECB should not be able to directly attribute the data to an identified user. The purposes for which the ECB and the national central banks may process personal data would thus be regulated.
Off-line digital payments in euros would enjoy a higher level of confidentiality than on-line payments, partly because of the small amounts that are involved.
Finally, the digital euro – subject to the acceptance of certain provisions – would be usable in the third countries and Member States whose currency is not the euro.
Next steps. The European Central Bank has welcomed the proposal.
Commissioner Dombroskis stressed that the proposal had been made after consultations had taken place with numerous stakeholders and the ECB.
Commissioner Mairead McGuinness insisted on the need for a democratic decision-making process to support the legislative procedure following this proposal, not only between the EU Council and the European Parliament, but also with stakeholders and citizens at a European and Member State level.
Link to the proposal: https://aeur.eu/f/9na (Original version in French by Émilie Vanderhulst)