The European Commission has put forward a legislative proposal that will establish the legal basis for a possible issuance ECB digital euro as a supplement to cash.
The euro is a symbol of Europe’s unity and strength.
For more than two decades, people and businesses have been accustomed to paying with euro coins and banknotes.
And this would not change with a digital euro ↓
— European Commission (@EU_Commission) June 28, 2023
“The digital euro will give consumers an alternative pan-European payment solution in addition to the options currently available. This means more choice and a stronger international role for the EU currency,” the body said in a statement.
CBDC will work like a digital wallet. Users will also be able to conduct offline transactions.
Virtual currency will provide a higher level of privacy than existing solutions like payment cards.
The spread of the digital euro will be handled by banks and other financial service providers. For individuals, the basic functions associated with the CBDC will be free. To expand access, users will be able to open accounts at post offices and other government agencies, including local governments.
Merchants will be required to accept the digital euro as legal tender in the EU. The exception will be small traders, for whom the cost of creating the appropriate infrastructure will be disproportionately expensive.
“The wide availability and use of CBDCs will also be important to EU monetary sovereignty – especially if other central banks around the world start issuing digital currencies. In addition, this is important against the backdrop of the development of the cryptocurrency market,” the European Commission noted.
The proposed document must be approved by the European Parliament and the EU Council. The final decision to issue a digital currency, as well as the technical part of the work, remains with the ECB.
The commission’s single package of complementary legislative initiatives also included a proposal to protect the role of cash as a means of payment and facilitate access to it by citizens and businesses in the euro area.
Announcing in May the development of a legal framework for a digital currency, Fabio Panetta, a member of the ECB Governing Council, predicted that its release would take approximately 3-4 years.
By September, the central bank should complete an almost two-year study, following which the regulator will decide on the feasibility of a digital euro.
Recall, according to the head of the ECB, Christine Lagarde, the CBDC will eliminate the risks of the EU losing financial sovereignty.
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