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Advantages and risks of a digital euro

Advantages and risks of a digital euro

The digital euro is set to become legal tender. Banks take care of the distribution. These warn of liquidity outflows in times of crisis. Who is obliged to accept it and when it is automatically drained from the account.

It will radically change the European financial system: the digital euro. The EU Commission wants to provide details on Wednesday, and the 62-page draft regulation is available “to the press”. Top answers:

1 What is the difference from traditional digital payment?

Unlike an ATM card, the digital euro is independent of a bank account. It will be an electronic payment method that comes directly from the European Central Bank (ECB). Money in a bank account, which can be transferred by credit card or other online service, represents a claim – any type of credit – by a customer against his bank. On the other hand, a digital euro would be a claim against the ECB itself and is directly owned by its users. Until now, central bank money existed only in the form of cash. The European Central Bank is creating the infrastructure for that. But as with ATMs and cash, it is private service providers who handle the distribution of digital euros to customers. Digital currency, for example, in an app on a cell phone. From there, digital euros can be converted online in real time.

2 Who can pay it out – and above all where and how much?

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