The EU’s central banking authority wants to adapt the euro to the digital age and modernize the EU to become a digital power. For this, The ECB is considering issuing a digital version of our currency. The proposed legislation not only sets the framework for the eventual launch of the digital euro, but also outlines the coin’s legal tender status, thereby ensuring its widespread adoption in the eurozone even after its equivalent becomes virtual.
Core services for end users such as ECB, digital euro account opening and closing, balance advice, funding and uncommitted digital euro account, and processing of transfers and payments, will be provided free of charge. Additionally, digital euro users will not: You do not have to pay any fees when making digital euro purchases.at the national or cross-border level.
The digital euro will offer a unified payment method across the entire eurozone, regardless of the location of the payer or the payment service provider used. Payments Instantly sent and received 24 hours a day.
Therefore it would be one 100% electronic money, just like Bitcoin or stablecoins. However, unlike cryptocurrencies, The value of the digital euro would be stable and guaranteed by the European Central Bank. It can be converted from face value to physical euros to provide a secure and reliable digital payment option. So a digital euro will be equal to a traditional euro and this rate will not change.
Who will be able to hold digital euros?
Accessibility is an important element of the project; make the digital euro available to all EU citizens on demandthrough banking institutions. Additionally, the plan allows private intermediaries to distribute the digital euro alongside other digital payment methods, while protecting merchants from excessive fees that encourage economic participation.
Consumers will receive digital euros from their commercial banks or payment service providers or public bodies designated by Member States. against a deposit or cash in Euros.
According to the proposal of the European Commission, the digital euro can be used for payments even without an internet connection. Eurozone businesses will need to accept the digital euro, except in limited circumstances for very small merchants and basic services will be provided free of charge to individuals. Finally, remember that according to the Commission, digital euro accounts do not earn interest.
Will the traditional euro disappear?
ECB likely to remain stable maintaining the role of cash in the payment system. Therefore, the traditional euro should not disappear immediately. bill ensures continued acceptance of cash in physical transactionsthus maintaining its legal tender status. It also provides flexibility for those who prefer cash transactions by guaranteeing the ability to withdraw and deposit funds to individuals and businesses.
The digital euro aims to provide a digital cash equivalent to enable citizens to choose between different forms of payment, including banknotes and coins, special electronic payment methods and the digital euro. Therefore, the physical euro should continue to coexist with the digital euro in the near future.
Why do we need a digital euro?
Cash has faced competition from electronic payment methods lately. To cope with this evolution, the digital euro will be designed with multiple objectives in mind, including providing access to a public digital currency, protecting privacy, promoting innovation and strengthening strategic autonomy from Europe.
The introduction of the digital euro could strengthen the international role of our currency. This will position Europe at the forefront of monetary innovation and ensure its continued influence in shaping the future of global finance. Central banks around the world are all exploring the potential of digital currencies.
Protection of privacy will also be an important aspect of the digital euro, which will set it apart from existing digital payment solutions. Although the options available often raise concerns about data security, digital euro should guarantee the same level of privacy as cash transactionsassures users that their personal information will continue to be protected.
What security for the digital euro?
In terms of security, the digital euro will offer several advantages over existing proprietary digital payment solutions. The European Commission particularly emphasizes: ability to pay offlineallows users to send money even without an internet connection when they are physically close to the recipient. This function guaranteesavailability of payments in remote areas or in the event of a network outage.
Using the digital euro offline will provide a cash-like experience, with users able to transact with a high degree of privacy, such as cash payments.
Financial inclusion will also be supported by the digital euro, because accessible to people without a bank account. Public institutions such as local authorities and post offices will be able to distribute digital euros to those who do not prefer to have a digital euro bank account.
One of the aims of this digital euro will be to strengthen the resilience of the currency by providing a regulated and secure alternative to unregulated technological developments in the banking and financial sectors such as crypto assets and alternative payment solutions that operate outside of the motherboard. systems.
In order to encourage the development of digital finance in the European Union, the Commission has proposed mandating banks, insurers and funds to share their customers’ data with fintechs in exchange for payment. Companies holding data will be required to share it, at the request of a customer, with companies that subscribe to data sharing programs, without undue delay and in real time.
When will the digital euro arrive?
For now, the issuance of a digital euro is still at the legislative stage. The European Central Bank’s investigation phase is expected to end in October 2023then we will have to wait to see if the ECB Governing Council plans to continue development and testing.
The final decision on the issuance of the digital euro will be taken after the legislative act is passed. probably won’t not taken for several years, at least not before 2028, according to the European Commission. However, as always, these estimates are often subject to change, so we will of course notify you if a new schedule is set.
