Written by Martin Höflmayr (1st edition).
A digital euro can be understood as central bank money offered in digital form for citizens and businesses to be used for their retail payments. It would be a central bank digital currency (CBDC) –an electronic equivalent to cash, complementing banknotes and coins – and the central motivation to develop a CBDC can be explained by the increasing digitalisation of financial services. Banknotes and coins, currently the only public money, are considered the ultimate anchor of the financial system. However, in recent years the number of cash payment transactions has declined substantially while digital payments have soared. At the same time, private currencies, such as Bitcoin, are challenging the role of sovereign currencies. Another argument for pursuing a digital euro relates to Europe’s ‘strategic autonomy’ and the external dependency on foreign payment-related service providers.
In October 2021, the ECB launched the investigation phase for the digital euro project. It is the ECB’s prerogative to decide whether or not to issue a digital euro, but the decision requires the approval of a regulation establishing a legal framework for a digital euro. The European Commission has therefore put forward a digital euro package. While the proposal would grant legal tender status to the digital euro, the legal tender status of the physical form of central bank money would also be ensured for the first time in secondary legislation.
- September 2023: Digital euro package (1st edition)
|Proposal for a regulation of the European Parliament and of the Council on the establishment of the digital euro; Proposal for a regulation of the European Parliament and of the Council on the provision of digital euro services by payment services providers incorporated in Member States whose currency is not the euro and amending Regulation (EU) 2021/1230 of the European Parliament and the Council; Proposal for a regulation of the European Parliament and of the Council on the legal tender of euro banknotes and coins|
|Committee responsible:||Economic and Monetary Affairs (ECON)||COM(2023)369; COM(2023)368;|
|Rapporteur:||Stefan Berger (EPP, Germany)||2023/0212(COD)|
|Shadow rapporteurs:||Paul Tang (S&D, Netherlands); Gilles Boyer (Renew, France); Gunnar Beck (ID, Germany); Michiel Hoogeveen (ECR, Netherlands)||Ordinary legislative procedure|
(COD) (Parliament and Council
on equal footing – formerly ‘co-decision’)
|Next steps expected:||Committee draft report|