European Pauses Plan To Introduce Digital Euro Support Law On June 28

Key Points:

• European Union legislation required to support a digital euro has been halted.
• According to an earlier leaked draft plan, the European Commission aims to introduce a free digital euro to all retail consumers.

The European Union law required to support a digital euro, which was scheduled to be released on June 28, has been delayed, according to CoinDesk.

The draft bill’s publication date, which was supposed to be before a definite European Central Bank (ECB) decision on whether to issue the money in digital form, has slipped multiple times. It was originally scheduled for May.

The action followed the publication of the draft law, which addresses privacy and technical difficulties for the central bank digital currency (CBDC), as well as a remark by finance ministers last week that seemed to cast doubt on the plan’s rationale.

On June 14, Bloomberg claimed that it had gotten a copy of a draft proposal from the European Commission. Its suggestion might force the ECB to restrict the usage of a CBDC in terms of financial stability.

These rules could not prohibit transactions that do not endanger financial stability, and they would have to apply throughout the eurozone.

According to the proposed legislation, accepting a digital euro would be required, and the asset would be regarded as legal money. Nonetheless, under some circumstances, certain parties may refuse to accept the asset.

The measure was most recently slated for debate and publishing at a June 28 meeting of the European Commission’s decision-making body. The commission did not explain why the delay occurred, nor did it specify a new publishing date.

The ideas were also reviewed by eurozone finance ministers at their usual Thursday meeting.

Ministers emphasized the importance of developing a compelling and clear narrative about what the added value of this development would be in terms of a difference to the economy and citizens’ lives, according to Irish Finance Minister Paschal Donohoe, who chaired the talks, adding that ministers within our institutions want to support this work but also look at how we can further develop that narrative.

By pursuing a retail CBDC, the EU would depart from other states. For example, the Swiss National Bank is primarily interested in a wholesale CBDC that may be used to ease interbank settlements.

The digital euro would be a legal currency, which means that economic operators would be required to accept payment in digital euro, with certain limitations, such as micro-enterprises with less than 10 workers and less than €2 million in annual revenue.

The CBDC, like real currency, is backed by the ECB. As a result, it would be more secure than bank deposits, which are only guaranteed by commercial banks and deposit insurance programs.

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