EU Financial Leader Urges Caution on Digital Euro Implementation Ahead of New Commission in June 2024

European Commissioner for Financial Stability, Financial Services, and the Capital Markets Union, Mairead McGuinness, has expressed her belief that it is prudent to exercise caution in the rollout of the digital euro until after the upcoming European Parliament elections in June 2024. According to her, the European Union’s central bank digital currency (CBDC) project should be handled with a measured and deliberate approach under the auspices of the incoming European Commission, which will be ratified by the newly elected parliament.

McGuinness made these remarks during her address at the Brussels-based think tank Bruegel on September 6. She underscored that the European Central Bank (ECB) would be making critical decisions about the project’s future in October. However, she also emphasized the importance of exploring this avenue, stating:

“In a world where cash is progressively falling out of favor, and we increasingly rely on cards and mobile devices for payments, as well as engage in e-commerce, we must consider where public money, particularly central bank public money, will reside when cash is no longer the primary mode of exchange. The need for a digital incarnation of our currency is apparent.”

Back in June, the European Commission unveiled a legislative proposal for the digital euro. This proposal includes provisions for essential digital euro services to be offered free of charge, stringent privacy protections, and the facilitation of offline transactions. Additionally, the proposal requires banks, insurers, and investment funds to share customer data with fintech companies, with compensation as an incentive.

ECB Executive Board member Fabio Panetta has recently voiced his public support for the Commission’s plan, describing the European CBDC as “a novel framework for safeguarding monetary sovereignty.”

The ongoing investigation phase of the digital euro project is expected to conclude by October 2023. Following this, the ECB will proceed with further development and testing of technical solutions.

The 2024 European Parliament elections are scheduled to take place from June 6 to 9, 2024. According to established EU procedures, the newly elected parliament will subsequently have the responsibility to endorse or reject the proposed president and other members of the European Commission, as nominated by the European Council.

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