European Commission Proposes Digital Euro to Foster Universal Acceptance

• The European Commission has unveiled its proposal for a digital euro, with the aim of making it widely accepted and easily accessible.
• Privacy protection and offline payment capabilities are key features of the proposed legislation.
• The proposal also introduces measures to encourage competition in the payments market

The European Commission made an official announcement on June 28 regarding its proposal for a legislative plan for a digital euro. The aim of this proposal is to establish the digital euro as a widely accepted and easily accessible form of payment.

The commission highlighted the importance of ensuring easy accessibility for individuals to obtain digital euros through their banks upon request, in order to prevent exclusion. As part of the proposal, there are provisions for offering free basic digital euro services, ensuring privacy protection, and enabling offline payments.

In addition, the commission put forth a separate proposal suggesting that banks, insurers, and funds share customer data with fintech companies, receiving compensation in return. The goal of this proposal is to promote the advancement of digital finance by enabling participating companies to have real-time access to customer data upon request.

European Commission envisions fostering payments market

By introducing this proposal, the commission aims to foster competition in the payments market, which is currently dominated by banks, Visa, and Mastercard, by encouraging alternative services offered by fintech companies. The proposed legislation also prioritizes user privacy and data protection, while addressing concerns related to money laundering and terrorist financing.

The European Central Bank (ECB) expressed its support for the commission’s proposal, particularly in ensuring the continued importance of cash in the payments system. The European Central Bank (ECB) expressed its support for safeguarding the legal tender status of cash euros, aligning with the proposal. ECB President Christine Lagarde expressed her enthusiasm for collaborating with other European Union institutions to ensure the digital euro meets the needs of the digital age.

The investigation phase of the project is set to be completed by October 2023, after which the ECB will proceed with further development and testing of technical solutions and business arrangements. The evaluation of the Governing Council’s decision to issue a digital euro will take place after the adoption of the legislative act.