With work in the EU Council already underway for several months, on Monday 12 February the European Parliament’s rapporteur Stefan Berger (EPP, German) submitted his long-awaited draft report on the European Commission’s proposal (see EUROPE 13211/11) to provide a legislative framework for the digital euro, should it be launched by the Governing Council of the European Central Bank (ECB). In his draft, Mr Berger proposes to introduce a series of changes to the initial proposal.
Governance. The draft text insists on the separation that must be established between the ECB’s monetary, supervisory and payment systems, on the one hand, and its activities relating to the digital euro payment system, on the other.
In addition, the proposal includes the creation of a specialised and independent unit within the ECB, exclusively responsible for carrying out the ECB’s tasks relating to the operation and management of a digital euro payment system and a digital euro payment infrastructure.
Facilitating the use of the digital euro and technical aspects. The rapporteur’s proposal adds a provision aimed at facilitating the use of the digital euro so that conditional payments in digital euros can also be made on ‘permissionless distributed ledgers’ where, until now, the text points out, “only privately issued assets like crypto-assets or stable coins are available as a means of payment”. With the ECB’s approval, and taking international standards into account, the digital euro would be a ‘token’ to be referenced on these chains.
The text also opens up the option for payment service providers to use front-end services developed by payment service providers or front-end services developed by the ECB.
The proposal suggests formalising the need for the ECB to have a back-end interface for payment service providers to support digital euro transactions.
In addition, the text proposes that online payment transactions in digital euros should be settled in the digital euro transfer infrastructure adopted by the Eurosystem. The initial proposal refers to the settlement of these transactions within the settlement infrastructure.
In addition, the text proposes that the ECB should make a testing facility available to payment service providers that are authorised or have applied for authorisation, so that they can test their software and applications relating to digital euro services.
Holding limits. Furthermore, with regard to the famous holding limit for digital euros – the aim of which is to limit its use as a store of value – the text proposes that payment service providers define holding limits for their customers and decide on their parameters and use.
The proposal is as follows: the holding limit could be agreed between the service provider and the user of digital euros, while “the daily limit of cash withdrawal defined for the costumer’s debit and credit cards may be considered as a reference threshold”.
Monitoring and control. The European Parliament, the Council of the EU, the Commission and the ECB would be responsible for applying a monitoring procedure after the ECB has presented the technological structure of the digital euro to assess, in particular, the alignment of the technology with the interests of digital euro users.
Finally, in general terms, the text proposes using the term ‘digital euro wallet’ rather than ‘payment account’ and puts forward a definition of the use of digital euros online and offline.
Amendments must be submitted by 23 February. Time is running out for the MEPs’ work, as Parliament hopes to vote on the text in committee on 4 March and in plenary in April.
To find out more, go to https://aeur.eu/f/au4 (Original version in French by Émilie Vanderhulst)