Key takeaways
- The European Parliament has advanced the digital euro, bringing the CBDC to final negotiations with member states.
- The asset will provide free basic accounts and holding limits, thereby protecting the liquidity of commercial banks.
- The ECB will use CBDC to counter stablecoins, reducing European dependence on external providers.
The digital euro moves to the negotiation phase
Europe is on the verge of implementing a unified central bank digital currency ( CBDC), the digital euro, throughout the euro zone.
On Thursday, the European Parliament advance the creation of a digital euro with 416 votes for, 169 votes against and 22 abstentions, allowing it to take a new legal step.
The currency, first proposed in 2023 as an instrument for Europe to maintain its monetary sovereignty and put digital money in the hands of its citizens, is now entering a new state of negotiations, with Parliament discussing the details of an upcoming implementation with member states.
Fernando Navarrete Rojas, the rapporteur who will lead the negotiations, stressed that the digital euro would become a new form of electronic money and would not replace cash.
“The digital euro will complement cash, but never replace it. No one should be forced to abandon cash, and no one should be left without a secure, resilient and truly European digital payment option.” he declared.
Among the key positions of the parliament are the widespread acceptance of this new currency, with exceptions applying to small and micro businesses that do not accept other digital payments, and the establishment of confidentiality guarantees for transactions.
The provision of basic digital euro services, such as opening accounts and managing funds, would be free, including access to at least one payment instrument.
In its early stages, the maximum amount of digital euros a person can hold will be capped to protect the financial system.
While the proposal has only just been put forward, the European Central Bank (ECB) is working to allow the presence of money in the field of payments, establishment partnerships with leading European payment standards providers to ensure its inclusion.
The ECB promotes the digital euro as a shield against the growing influence of private money, notably stable coinsin the European economy. Piero Cipollone, member of the executive board of the European Central Bank (ECB), stressed that the digital euro “reducing Europe’s dependence on external providers and supporting innovative, pan-European payment solutions for consumers and merchants for domestic retail payments” counter foreigners stable coin solutions.
