Every individual holding EU citizenship has the liberty to reside, engage in work, pursue education, and conduct business activities in any EU member nation. The usage of euro currency significantly facilitates these activities, being freely accepted for all transactions – buying, selling or service provision – within the euro zone. The European Central Bank (ECB) is instrumental to this system, managing the supply of euro banknotes which are, for most Europeans, an essential medium of exchange. Aside from being easy to acquire, cash is all-inclusive, universally recognised in the euro zone, and provides the utmost level of privacy.
However, in the current era of digitalisation, there is a lack of a digital counterpart to cash for transactions. In certain circumstances, domestic solutions like bank cards or virtual wallets can be used for in-store electronic transactions. Yet these solutions are both inconsistent across different euro zone countries, and often malfunction for online shopping, bill splitting or during travel. This necessitates reliance on non-European cards or electronic payment methods, which are not always accepted and complicate transactions by requiring several payment routes.
Addressing these drawbacks is a priority for ECB, demonstrated by their efforts towards creating a digital euro. While maintaining commitment towards cash, the aim is to extend cash benefits into the digital sphere. With the digital euro, consumers would have an extra transaction method that supplements cash. They will have the independence to decide whether or not to utilize it.
The digital euro is projected to unify Europeans in a volatile and digital world and simplify their lives whilst maintaining their power of choice. The ease of digital payments and cash-like attributes converge in a digital euro. Like physical banknotes, this currency would allow Europeans to use one public payment method across the euro zone for digital transactions in stores, on e-commerce platforms, or between individuals. Even in network shortage or power loss situations, the digital euro could function offline, facilitating undeterred transactions.
Promoting companies in the euro zone to provide continent-wide digital payment solutions would be made easier by a digital euro. This advance would foster competition in a market primarily controlled by a few non-European entities, reducing expenses for sellers and buyers. Simultaneously, it would boost Europe’s strategic independence and resilience. Given the escalating division and dominance of tech giants in the world, assuring affordable and secure payments for Europeans is a critical responsibility.
“The utilization of a digital euro could grant superior privacy standards compared to current commercial offerings. Within an offline payment situation, transaction specifics would solely be shared between the transaction parties. Advanced technologies aiming to enhance privacy would be employed for online transactions. All data will be pseudonymous and preserved under EU laws, ensuring it adheres to the world’s highest privacy standards. Furthermore, independent data protection authorities would monitor our conformity with data protection regulations.
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For fundamental usage, a digital euro would be devoid of any fees, ensuring it is accessible to all segments of society, including digitally and financially less skilled individuals and susceptible sections. It would provide a universally inclusive and approachable mean of transaction through an application.
Despite primarily serving as a payment method, a digital euro represents a tool to bridge the gap between Europeans in a progressively unstable and digitalized world, simplifying everyday life while maintaining our freedom to choose.
A year prior, the introduction of the Single Currency Package by the European Commission manifested a safeguard for cash transactions within the euro area and delineated a framework for a possible digital euro implementation. This would be deliberated on once the framework receives approval from European legislators. Engaging with all relevant parties remains a priority as we appreciate the democratic dialogue that is currently in motion.
This opinion piece was disseminated across different media platforms within the euro area. The author is Piero Cipollone, a member of the ECB executive board.”