The European Commission has revealed its legislative proposal for the introduction of a digital euro. This digital currency is envisioned to complement, not replace, existing banknotes and coins, serving as a universally accepted means of payment across the euro area.
According to the European Central Bank’s press release, the proposed legislation ensures that the digital euro would be easily accessible to all, just like traditional cash. It also guarantees that basic services related to the digital euro would be free for users while providing economic incentives for private intermediaries to distribute the digital euro, akin to other digital payment methods.
The legislation places a high priority on user privacy and data protection while also mitigating risks associated with illicit activities. It even allows for offline digital euro payments, offering privacy levels similar to cash transactions.
Christine Lagarde, President of the European Central Bank (ECB), expressed her support for the digital euro, viewing it as an essential evolution of the currency for the digital age. The investigation phase of the digital euro project is set to conclude in October 2023, after which the ECB’s Governing Council will decide on the next steps.
Fabio Panetta, an Executive Board member of the ECB, emphasized the importance of the legislative proposal in ensuring that the digital euro incorporates the valued features of cash into the digital realm. He also welcomed the Commission’s proposal on the legal tender status of euro cash, ensuring its continued accessibility and acceptance.
The ECB is committed to ensuring that cash remains a vital part of the payment system, with the legislative proposal guaranteeing the acceptance of and access to euro banknotes and coins. The ECB is prepared to provide technical input to support the EU co-legislators and will deliver its opinion on the proposed legislative changes upon consultation.