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The digital euro, a strategic asset for the European Union
The Eurogroup (Economy and Finance ministers of euro area member states) released and statement reaffirming its support to the digital euro project, which is seen as an opportunity to strengthen the strategic autonomy of the European Union, reflecting the central geopolitical role played by payment systems. The statement is relevant because it will guide the European Commission on the negotiations on the future digital euro legislative proposal expected to be presented during the first half of 2023.
Main takeaways from the statement:
- Complement to cash, widely accessible to the public: A digital euro should complement, and not replace cash. A digital euro should be safe and resilient, ensure a high level of privacy, be easy and convenient to use and widely accessible to the public, including in terms of costs for end-users.
- Privacy is key: The digital euro should ensure and maintain users’ trust, for which privacy is a key dimension and a fundamental right. At the same time, the Eurogroup considers that its design should comply with other policy objectives such as preventing money laundering, illicit financing, tax evasion and ensuring sanctions compliance. A risk-based approach (more privacy in the less risky transactions) could be followed.
- Safeguard financial stability: potential risks to financial stability should be limited, for example by imposing holding limits and constraints in the design of the digital euro, while maintaining its attractiveness as a means of payment.
- Ensuring a pan-european reach whilst catalyzing innovation in the financial sector and complementary to private solutions. The digital euro ecosystem should leverage the strength and experience of public and private participants and build on current European infrastructure.
- Programmable payments: the digital euro could be a building block of the future architecture for state-of-the-art payment solutions. To this end, it could allow for initiating a payment automatically when predefined conditions are met – meaning that users would be able to program payments. A digital euro should always be convertible at par with other forms of the euro, such as banknotes and commercial bank deposits.
- Appropriate regulatory measures to grant the digital euro legal tender status, should be considered to ensure consistency with cash and to make digital central bank money widely accessible for retail use to all end-users in the euro area, whilst taking into account the distribution of the costs and required technologies.
- Interoperability with other Central Bank Digital Currencies should be an important feature of the digital euro design.
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