European Commission Proposes Digital Euro for Universal Acceptance

CryptoGrafos reported on June 28 that the European Commission has unveiled a legislative proposal for the introduction of a digital euro, with the goal of establishing it as a widely accepted and easily accessible payment method.

The announcement highlighted the Commission’s commitment to ensuring that digital euros are readily available to individuals through their respective banks upon request, thus guaranteeing inclusivity and preventing anyone from being left behind. In addition to accessibility, the proposal includes provisions for free basic digital euro services, robust privacy protection measures, and the facilitation of offline payments.

In a separate proposition, the Commission recommended that financial institutions, including banks, insurers, and funds, share customer data with fintech companies in exchange for appropriate compensation. This initiative aims to foster the development of digital finance by enabling participating companies to have prompt and continuous access to customer data, thereby ensuring real-time availability of crucial information.

This move by the European Commission is intended to foster competition in the payments market, which has long been dominated by traditional banks, as well as major players like Visa and Mastercard. Fintech companies offering innovative alternative services have emerged as significant competitors, prompting the Commission to take steps to level the playing field. Moreover, the proposed legislation places a strong emphasis on protecting user privacy, safeguarding data, and mitigating the risks associated with money laundering and terrorist financing.

The European Central Bank (ECB) has expressed its support for the Commission’s proposal and its determination to uphold the role of cash in the payments system. The ECB fully endorses the preservation of the legal tender status of euro cash, as stated by ECB President Christine Lagarde:

“We eagerly anticipate collaborating with other European Union institutions to develop a digital euro that ensures the adaptability of our currency in the digital age.”

The investigation phase of the project is scheduled to conclude by October 2023, following which the European Central Bank will progress with further development and testing. In subsequent phases, the ECB will focus on refining technical solutions and establishing appropriate business arrangements.

It is important to note that any decision regarding the issuance of a digital euro by the Governing Council will only be made once the legislative act is officially adopted.

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