News item | 28-06-2023 | 13:31
On 28 June 2023, the European Commission presented a proposal for the possible issue of a digital euro. The European Commission proposes that the digital euro be given legal tender status, not programmable and that the privacy of citizens in the EU is monitored in the same way as current payments via the bank. People can decide for themselves whether or not they want to have digital euros and use them to make payments. Cash will also remain available.
Access to public money
The digital euro is a digital form of our cash. The digital euro is being considered because it can guarantee access to public money. The best-known forms of money are cash and money in a bank account. Cash is public money and is issued by the European Central Bank (ECB). Money in a bank account (book money) is issued by the commercial banks themselves. The Dutch pay more and more online and therefore use less and less cash. The government believes that public money should always be available. It is therefore proposed to also introduce a digital variant of cash, for people who like to pay digitally. This digital variant is therefore issued by the ECB, just like cash.
Account with current banks and payment service providers
According to the European Commission’s proposal, anyone can open a digital euro account with a bank or a payment service provider. The use of the digital euro is not mandatory. In the event of a political agreement, users will soon be able to pay with the digital euro via the app of your bank or other payment service provider. In addition, other payment methods are being investigated for people who do not want to bank and pay via a mobile device or an app. The digital euro will be given the status of a ‘legal tender’, which means that you can in principle pay with it everywhere. There will probably be a maximum to the amount that someone can put in digital euros on an account. A digital euro is mainly intended for payment and not as an investment product. That is why future users do not receive any interest on the balance on a digital euro account.
Privacy and security
The digital euro will not be programmable. This means that the government or the ECB cannot determine (including in the design of the digital euro) which purchases the digital euro may and may not be used for. Payment data cannot be traced back to individual users either. The ECB only receives the highly necessary encrypted information to process the payment. The digital euro therefore offers governments no new possibilities compared to what they are already allowed to do. Governments do not track personal transactions now and will not do so in the future.
Pay offline
The proposal from the European Commission states that from the outset offline payments with a digital euro should be made possible. The ECB is investigating whether this can be made technically possible, for example, by keeping telephones close together. No internet connection is then required to enable a transaction in digital euros between the owners of those telephones. A PIN code would then have to be entered. If it actually becomes possible offline paying with the digital euro, this offers more privacy than the current payments via commercial banks. In that case, no one will see personal data and transaction data.
More information about the digital euro and the proposals of the European Commission: https://www.rijksoverheid.nl/onderwerpen/financien-europese-unie/digitale-euro