The European Commission has put forward a proposal to set out a framework for a new digital form of euro that the European Central Bank (ECB) could issue in the future.
To adjust to the increasing digitalisation of the economy, the ECB is investigating the possibility of introducing a digital euro — leading to a stronger international role for the euro, the Commission says.
The European Commission has proposed two measures to allow cash and digital payment options for citizens and businesses wanting to pay with central bank money.
One of the legislative proposals put forward discusses the legal tender of euro cash to safeguard the role of cash, ensuring it is widely accepted as a means of payment, and remains easily accessible for people and businesses across the euro area.
While the second legislative proposal establishes a legal framework for a possible digital euro. The Commission says this would ensure people and businesses have an additional choice that allows them to pay digitally with “a widely accepted, cheap, secure and resilient form of public money in the euro area”.
The proposal sets out the legal framework and essential elements of the digital euro. Once adopted by the European Parliament and Council, it would enable the ECB to eventually introduce a digital euro that is widely usable and available.
It will be for the ECB to decide if and when to issue the digital euro. This project will require significant further technical work by the ECB, the Commission confirms.
The digital euro would be available alongside existing national and international private means of payment, according to the Commission. People and businesses could pay with the digital euro anytime and anywhere in the euro area. Further, it would be available for payments online and offline.
Banks and other payment service providers across the EU would distribute the digital euro to people and businesses, the Commission adds, with basic digital euro services provided free of charge to individuals.
The digital euro could also be a solid basis for further innovation, allowing banks to provide innovative solutions to their clients, for example.
According to the Commission, the wide availability and use of digital central bank money would be important for the EU's monetary sovereignty — particularly if other central banks around the world start developing digital currencies. The Commission says this will be important against the backdrop of the developing crypto currency market.
Commenting on the announcement, Mairead McGuinness, commissioner for the Financial Services, Financial Stability and Capital Markets Union, says: “Bringing the euro into the digital age is an important European project. By complementing cash, I have no doubt that a digital euro will bring advantages to citizens and businesses across the EU. But I am aware that it requires peoples’ trust and confidence.
“Today’s proposal will help frame the debate around what a digital euro is and the advantages of creating it. We are at the beginning of a long democratic process, one which will be done hand-in-hand with the European Parliament, Council — and, of course, the European Central Bank, who will decide if and when to introduce the digital euro.”
Thierry Breton, commissioner for Internal Market, adds: “The digital euro will further strengthen the international role of the euro and provide consumers and businesses with a further, universal, digital payment solution.
“It will trigger new opportunities in terms of faster, safer and more innovative payments, all while ensuring the highest level of privacy for its users.”
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