Digital Euro

The Eurosystem Moves to the Next Phase of the Digital Euro Project

On 18 October 2023, the Governing Council of the European Central Bank (ECB) decided to move to the next, preparatory phase of the digital euro project. This decision follows the completion of a two-year investigative phase launched by the Eurosystem in October 2021 to assess the potential design and distribution models for the digital euro. Based on the conclusions of this phase, published in a special report, the ECB proposed a digital euro that would be widely accessible to citizens and businesses through supervised intermediaries such as banks.

According to the proposed design, the digital euro would represent a digital form of cash that could be used for all digital payments across the Eurozone. The digital euro would be widely available, free for regular use, and accessible both online and offline. It would offer the highest level of privacy and allow for instant settlement of payments in central bank money. It could be used for payments between individuals, at points of sale, in e-commerce, and for government transactions. The digital euro would be the first digital payment tool to offer all these features.

Why a Digital Euro

Europe is considering the introduction of a digital euro as the next step in the evolution of our common currency. The digital euro would not take the form of physical coins or banknotes but would be used for digital payments, retaining all the most important characteristics of cash.

The digital euro would be:

• Widely accepted and easy to use;
• Free for basic use;
• Usable for all digital payments in the Eurozone;
• Not requiring an online connection (usable offline);
• Offering the highest possible level of privacy;
• Inclusive, ensuring no one is left out;
• Associated with instant payment settlement;
• Secure;
• Risk-free (as money is issued by the central bank);
• Usable for payments at points of sale and between individuals.

No other digital payment tool today offers all these features at once. The digital euro would fill this gap.

The digital euro would exist alongside euro cash and other electronic payment methods, providing end users with additional freedom in how to pay for goods and services. With the digital euro, people would have more payment options and a secure solution that fully respects our privacy.

Central banks have no interest in, nor will they monitor, people or their payments, and have no commercial ambitions. If the digital euro is introduced, the central bank would not have access to any personal data that directly identifies end users, nor would it store such data.

The digital euro aims to achieve a level of privacy similar to cash for offline payments, as it would not require third-party verification and would rely solely on direct transfer from payer to payee.

The digital euro would be easy to use. Those who have more difficulty with digital devices would not be left behind. A basic service would be available. Even those without a bank account or payment card would not be excluded. The basic offer should continue to be provided for everyone, whether for payments in stores, online, between individuals, or for government transfers.

The digital euro would also address risks arising from geopolitical tensions. The fragility of global supply chains revealed by the coronavirus pandemic (COVID-19) and Russian aggression in Ukraine painfully highlighted the risks of relying solely on external suppliers for basic needs.

Strengthening Europe’s Resilience with the Digital Euro

The digital euro can strengthen Europe’s resilience in at least three ways:

1. It would ensure that in addition to European private payment solutions (which have so far remained national), there is a payment solution for the Eurozone within European governance. This would support the strategic autonomy of the entire European payment ecosystem.
2. The digital euro could rely on its own core infrastructure. This would increase the overall resilience of the European electronic payment system in the event of cyberattacks and technical disruptions.
3. The digital euro would also provide a pan-European platform on which European payment service providers could build services with a pan-European reach for their customers. This would increase the efficiency of the payment system, reduce costs, and foster innovation.