European Commission Proposes Digital Euro: What You Need to Know?

Thursday, 6 July, 2023

The European Commission on June 28, 2023, presented a 'single currency package' comprising two proposals aimed at ensuring the continued accessibility and usability of euro banknotes and coins throughout the euro area. It seeks to establish a framework for a digital version of the euro that could be issued by the European Central Bank in the future, alongside physical cash, as an alternative payment method.

The euro has long served as a symbol of unity and strength in Europe. Over the past two decades, individuals and businesses within and beyond the euro area have become accustomed to utilizing euro coins and banknotes for transactions. While a majority (60%) of people surveyed expressed a desire to retain the option of using cash, there is a growing trend towards digital payment methods, including cards and applications offered by banks and other digital financial institutions.

To accommodate these changing preferences, the Commission is proposing two sets of measures to ensure that individuals have the choice to make payments using either physical or digital euro, representing central bank money. This package includes a legislative proposal that establishes the necessary legal framework for a potential digital euro, complementing traditional banknotes and coins.

Its purpose is to provide people and businesses with an additional option, beyond existing private alternatives, to make digital payments using a widely accepted, cost-effective, secure, and reliable form of public money within the euro area. The decision to issue the digital euro will ultimately rest with the European Central Bank, provided that the proposal to establish the legal framework is accepted by the European Parliament and Council.

The package also encompasses a legislative proposal concerning the acceptance and accessibility of euro cash as legal tender. This measure aims to preserve the role of cash as a widely accepted means of payment, ensuring its availability for individuals and businesses across the euro area.

Here are some of the key features of the digital euro as proposed by the European Commission:

It would be a digital version of the euro, issued and regulated by the ECB
It would be available to everyone in the Euro area
The same privacy and security standards would protect it as cash
It could be used for both offline and online payments
It would be designed to complement cash, not replace it

Source

https://finance.ec.europa.eu/publications/digital-euro-package_en