On Wednesday 20 March, the Member States’ ambassadors to the European Union adopted a progress report prepared by the Belgian Presidency of the EU Council on the proposal for a regulation on the establishment of the digital euro (see EUROPE 13211/11) and the proposal for a regulation on the provision of digital euro services by payment service providers established in Member States whose currency is not the euro.
During working group discussions in the first half of 2024, numerous legal and technical options were discussed.
However, while there is some convergence of views on certain provisions, such as the coexistence of an online and an offline mode of using the digital euro, or the need to strike a balance between confidentiality and the fight against money laundering, the Member States are still far from reaching a firm consensus on these specific issues.
The main topics discussed were: - how to use the digital euro offline; - the impact of multiple digital accounts in euros; - upstream solutions; - emergency switching; - joint digital accounts in euros; - compensation models; - the division of powers between the co-legislators and the European Central Bank (ECB).
Disagreements over respective powers. For the moment, the Member States have not found common ground on the ECB’s competence on the issue of limiting the function of the digital euro as a means of payment.
Some Member States are in favour of strengthening the role of the co-legislators in this area, arguing that setting maximum limits for users’ holdings of digital euros is not an obstacle to the ECB exercising its powers to define and implement monetary policy.
Supporters of this interpretation add that currency is a matter for the co-legislators, under Article 133 of the Treaty on the Functioning of the EU.
On the other hand, other Member States consider that this article applies without prejudice to the ECB’s powers and consider that the ECB alone is competent to set limits on the holding of digital euros.
For the European Commission and the ECB, this objective of preserving stability does not authorise legislators to encroach on the powers attributed to the ECB, which include exclusive competence for decisions concerning the issue and determination of the volume of euro issues.
The ECB also believes that the size and composition of the monetary base must be under its control, as a prerequisite for the effective implementation of monetary policy.
In its report, the Belgian Presidency suggests that these issues could be raised to a higher political level.
Payment services. Discussions on the respective competences of the institutions also covered charges for payment services. The Member States and the ECB seem to have reached a consensus that the ECB should not be competent to determine the ceilings applicable to merchant service charges and charges between payment service providers.
Some Member States believe that the method for setting the fee ceiling and the actual setting of these ceilings should be entrusted to the Commission, which would act by means of a delegated or implementing act.
Link to the report: https://aeur.eu/f/crf (Original version in French by Émilie Vanderhulst)