The European Commission has announced its plans to propose legislation for the introduction of a digital euro, with the aim of establishing it as a widely accepted and user-friendly payment method. The proposal highlights the importance of ensuring easy access to the digital euro through banks upon request, in order to prevent exclusion of citizens. It also includes provisions for free basic digital euro services, privacy protections, and offline payments.
In addition to the digital euro proposal, the committee has recommended that banks, insurers, and funds share customer data with fintech firms in exchange for compensation, with the goal of promoting the development of digital finance. According to the proposal, companies holding customer data would be required to share that data with participating companies in a timely and continuous manner upon customer request, ensuring real-time access to information.
By introducing these measures, the European Commission aims to open up the payments market, which is currently dominated by banks, Visa, and Mastercard, to competition from fintech companies offering alternative services. The proposed legislation also emphasizes the importance of protecting user privacy and data while mitigating the risks of money laundering and terrorist financing. The European Central Bank (ECB) has expressed its support for the proposal, particularly in preserving the legal tender status of the cash euro. ECB President Christine Lagarde has welcomed the initiative and expressed the ECB's Commitment to working with other EU institutions to develop a digital euro suitable for the digital age.
The investigative phase of the digital euro project is expected to be completed by October 2023. Following that, the ECB will carry out further development and testing of technical solutions and operational arrangements in the subsequent phase. The decision to issue a digital euro will ultimately be made by the Governing Council, but only after the legislative act is passed.
