On Wednesday, the European Commission presented a legal framework that allows the European Central Bank to introduce a digital euro. At the same time, the Commission is also preparing a bill to ensure the status of coins and banknotes as legal tender.
“It is time for the euro to adapt to the digital age and keep pace with technological progress. A digital euro would not replace cash, but would be a good and logical addition, and a public alternative to private digital payment methods,” said Vice President Valdis Dombrovskis.
Like the coins and banknotes, the digital euro would be issued and backed by the ECB, which should guarantee stability and security. People and companies should be able to pay easily and free of charge anywhere in the twenty euro countries with the euros in their digital wallet, which can be stored on a card or telephone. The Commission also ensures that privacy is guaranteed.
Doubts and questions
Nevertheless, questions remain about the usefulness of a digital euro in a world in which a multitude of financial services are already available, such as credit cards and mobile payment apps. Dombrovskis insists on the strategic importance. It is feared that the euro, the world’s most important currency after the dollar, would lose its importance if stablecoins or digital versions of foreign currencies were widely used in global payments.
“We are not the first. More than 100 central banks around the world are preparing for the possibility of introducing digital versions of their currency,” Dombrovskis made clear. The proposal must be approved by the Member States and the European Parliament. Afterwards it is up to the ECB to make a decision. In any case, the digital euro would not be issued before 2028.
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