Introduction to the Digital Euro
The European Union is moving forward with plans to create a digital version of the euro currency. A recent survey by the European Consumer Organisation found that most Europeans want a digital euro to be secure, easy to use, and free of charge. This survey polled 10,000 consumers across 10 eurozone countries and revealed some interesting insights into what people want from a digital euro.
Key Features of the Digital Euro
The survey found that 86 percent of respondents worry about fraud protection, while 87 percent said that paying digitally should be free. According to Agustin Reyna, the director general of the European Consumer Organisation, "A digital euro will be attractive to consumers if it is easy to use, including for those currently struggling with digital payments, if it provides a strong protection against fraud, including good refund rights, and if basic services such as a payment card are offered for free." The digital euro would function as electronic cash and reduce the European Union’s dependence on United States-based payment providers, such as Visa and Mastercard.
How the Digital Euro Would Work
The European Central Bank would be responsible for issuing and managing the digital euro, similar to how it currently handles physical euro banknotes. The ECB would oversee the currency’s technical infrastructure, security protocols, and distribution system through participating banks. Most eurozone countries currently rely on international payment providers, with only seven operating national card systems. The digital euro would change this by providing a European-owned and operated payment system.
Implementation and Oversight
EU finance ministers recently agreed on implementation steps, including oversight of the currency’s issuance and holding limits. The Eurogroup body, which brings together finance ministers from all euro-using countries to coordinate economic policies, will play a key role in the digital euro’s future. According to Eurogroup President Paschal Donohoe, "An important element of the compromise that we reached is that before the ECB makes a final decision in relation to issuance, there would be an opportunity for a discussion of council of ministers in relation to how the project will move forward."
Legislation and Launch
Legislation for the digital euro was first proposed by the European Commission in June 2023 and now awaits approval from EU governing bodies. If adopted, the ECB would then decide whether to go ahead with the plan, and a two-and-a-half-year preparatory phase could begin. The ECB expects a possible launch by mid-2029, according to board member Piero Cipollone. ECB President Christine Lagarde said at a news briefing in Copenhagen, "The digital euro is not just a means of payment, it is also a political statement concerning the sovereignty of Europe and its capacity to handle the payment, including on a cross-border basis, with a European infrastructure and solution."
Conclusion
In conclusion, the digital euro is an exciting development that could change the way people make payments in the European Union. With its focus on security, ease of use, and freedom from charge, the digital euro has the potential to be a popular payment method. While there are still many steps to be taken before the digital euro is launched, the EU’s commitment to creating a European-owned and operated payment system is a significant step towards reducing dependence on international payment providers. As the digital euro moves forward, it will be interesting to see how it develops and what impact it has on the European economy.
