Brussels to Unveil Legislative Framework for Digital Euro
Today, Wednesday, Brussels will unveil a legislative framework for the digital euro, which it intends to launch in a project that sparks conspiracy theories and faces bank hostility without responding to the real aspirations of European citizens.
The Digital Euro: A Solution in Search of a Problem?
“Currently, the digital euro seems to be a solution in search of a problem,” German European MP Markus Ferber commented sarcastically, adding that the European Commission and the European Central Bank should “convincingly explain why we need it.”
Growing Reliance on Digital Currencies
What new will the digital euro offer at a time when the use of electronic currencies has spread for decades through various financial services such as credit cards and, more recently, payment applications on mobile phones?
The Roadmap for the Digital Euro
The European Central Bank believes that the growing reliance on digital currencies in payments, especially with the boom in e-commerce, requires the creation of a digital euro, although it will face increasing competition from cryptocurrencies or digital copies of other foreign currencies.
The Frankfurt-headquartered European Central Bank launched the research phase of the project in July 2021 with the goal of introducing an electronic version of the European single currency starting in 2027 or 2028.
The draft text, the content of which was made public today, Wednesday, establishes the necessary legal framework to achieve this goal, provided that the draft is then discussed over several months with Member States and the European Parliament.
Addressing Concerns and Misinformation
The digital euro is raising concerns, fueled by disinformation campaigns, as some claim on social media that it aims to abolish cash currency in order to ensure citizens’ surveillance by all by monitoring their purchases and financial transactions.
But the reality is that e-currency will only be an additional and optional payment option, in addition to the possibility of paying in cash. In addition, this option, which depends on payment by card or mobile phone, also allows you to use the offline payment feature that keeps the username private.
The Digital Euro and Cash Currency
The digital euro will have legal force in the twenty countries that have adopted the euro.
However, small companies and some non-profit associations will be able to opt out of receiving payments through it, and individuals will also be able to opt out of accepting it in the context of their personal transactions, according to a copy of the bill seen by Agence France-Click.
European Central Bank Governing Council member François Vilorois de Gallo confirmed last week that it “will not replace cash” and will leave “freedom” for European citizens to decide whether they want to use it or not, explaining during a lecture in Paris that it will have “the same characteristics” as the currency and “provide respect for the privacy” of its users.
Global Trends in Digital Currency
China is already conducting large-scale testing of the digital yuan, while the US and UK are also considering adopting an electronic version of their currencies.
“At a time when everything is going digital, why should the central bank currency remain the only fiat currency?” asks Vilorua de Gallo.
Proponents of the e-euro point out that this guarantees a free global service guaranteed by the European authorities. It will be available to the four million Europeans who are currently bankrupt at a time when making payments online has become a basic need.
Bank Concerns and Reassurance
The European Bureau of Consumer Associations said it “strongly supports” the introduction of a digital euro.
However, banks are concerned about the possibility of loss of income and the risks that threaten financial stability if there is an active demand from individuals to withdraw their deposits from current accounts to hold them in digital currency, which will lead to their withdrawal from banks. “Balance Books.
“Commercial banks have been offering the digital euro for many years… there is currently no need that has not yet been met,” the Federation of French Banks said.
In an effort to reassure financial institutions, the European Commission’s draft says the ECB “will develop tools to limit the use of the digital euro as a reserve currency.”
This means that it will set a ceiling for each person on the amounts they can hold in that currency, which could be 3,000 euros, as a central bank spokesman suggested in May.
The Future of the Digital Euro
The text clearly states that users of the digital euro “will not have a contractual relationship with the European Central Bank”, but banks will distribute an electronic currency that they can integrate into their services available to customers.
