For several years now, the institutions of the European Union have been working on the creation of a “digital Euro”, at the instigation of the European Central Bank.
The stated aim is to create digital cash that can be used to pay both on the Internet and in physical shops throughout the euro zone, free of charge and without the need for an Internet connection.
Such an innovation would aim to facilitate day-to-day payments in the euro zone, strengthen its monetary sovereignty, increase competition in the European payments sector (by limiting financial intermediaries) and better combat money laundering and tax fraud.
Like cryptocurrencies, this digital Euro will circulate via electronic wallets.
Unlike the latter, however, the digital Euro will be managed and guaranteed by the European Central Bank, and cannot be used for speculation, since it will have exactly the same value as the physical Euro (coins and banknotes).
For the time being, the project is only at the sketch stage: after a two-year study phase, the Governing Council decided on October 18, 2023 to open the preparatory phase.
During this phase, which began in November 2023, the set of rules applicable to this digital Euro will be drawn up, and the service providers who will develop the support infrastructure will be designated.
One of the main challenges of this work is to ensure that users’ privacy is respected.
While physical cash makes it possible to pay anonymously and without individual tracking, the same cannot be said of the digital Euro.
In this respect, the European data protection authorities recommend:
– to establish a “space of anonymity” (no traceability below a certain transaction amount, for example), and
– that the transaction tracking should only be authorized by entities with a legal mission in the public interest.
In any case, and if it sees the light of day, this project will probably modify consumer demand (more Europeanized?), transaction costs (bank fees) and perhaps retail payment terminals.
Stay tuned!
