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The European Union Commission is driving the digital euro forward

The European Union Commission is driving the digital euro forward

digital euro

The digital euro aims to give every citizen digital access to central bank money, which until now has been available in the form of banknotes and coins.

(Photo: Imago Images/Christian Ohde)

Frankfurt, Brussels The European Union Commission officially presented its plans for a digital euro on Wednesday. The Commission envisions that this will become a legal tender, just like cash.

At the same time, the Commission wants to tighten the obligation to accept cash. For example, you want to use a new legislative proposal to ensure that citizens will continue to pay cash in all euro countries in the future.

EU Economic Commissioner Paolo Gentiloni put it this way: On the one hand, it is about increasing the legal certainty of legal tender, and on the other hand, it is about broadening the definition to include the digital euro. In the case of cash, there is a basic obligation on retailers to accept it. However, the EU Commission is now trying to define the scope more precisely.

The reason behind this is the concern that cash is being used less and more in the Eurozone. As a result, this may lead to low retail acceptance. There are really big differences between the different EU countries. The EU authority said the planned new regulation now requires member states to “monitor the level of acceptance of cash and rejection of cash payments and report this to the Commission and the European Central Bank”.

Under certain circumstances, states will then have to take measures to ensure a certain level of acceptance of cash. The EU Commission can determine the necessary measures if necessary.

Exceptions to the obligation of acceptance

There are exceptions to the obligation to accept the digital euro. They apply, for example, if retailers — at the cash register or as an online store — and consumers have clearly agreed to a different payment method. Handelsblatt had already reported on the legislative proposal to the European Commission last week. Very similar rules apply to cash.

Paolo Gentiloni

European Economic Commissioner at a press conference in Brussels to present plans for a digital euro.

(photo: AP)

The digital euro aims to give every citizen digital access to central bank money, which until now has been available in the form of banknotes and coins. Because central bank money is the only 100% secure means of payment and is highly valued by citizens in Germany, among other places.

In Germany, for example, nearly 40 percent of retail sales are settled in notes and coins, while in many other EU countries the cash percentage is already much lower.

>> Read the comment here: Why the digital euro does not solve any problems

The Commission also explained in more detail what speaks in favor of the digital euro, because without a digital currency, it is feared that private cryptocurrencies will continue to spread in Europe and could then reduce the role of the euro. For this reason, Gentiloni emphasized: “We can’t stay behind: 100 central banks are already running digital central bank money.”

However, doubts remain about the usefulness of a central bank digital currency. “The exact form of value added for the digital euro as opposed to existing payment systems has not yet been answered,” said Joachim Schuster, SPD MEP. He believes that a comprehensive assessment of potential is essential.

Suspicion is also widespread among the population. A recent poll of 5,000 citizens by the opinion research institute Civey showed that 56 percent had a negative view of plans to introduce a digital euro. 26 percent are positive about it, the rest of the respondents preferred not to give an assessment on this topic.

The Commission wants to leave the implementation of the law to the European Central Bank (ECB). However, the Governing Council, EU member states and the European Parliament will have to agree first. The ECB Governing Council is expected to decide in October whether the central bank will start the next project phase of a digital euro, which will then include the technical development of a digital euro.

Three years are planned for this. However, the EU Commission indicated that the final decision to issue a digital euro should not be made before 2028.

Individuals should be able to access the digital euro via commercial banks. In addition, an upper limit for accounts in digital euros, which will be set by the European Central Bank, is being discussed. Because: If consumers are able to hoard digital euros in any amount, there is a risk that they will transfer their money from commercial bank accounts to digital euros at a rapid pace as soon as the bank gets into trouble – which is likely to exacerbate the difficulties.

more: The digital euro is set to become legal tender

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