He Council of the European Union has reported that all EU member countries have reached an agreement to adopt a common position in view of the negotiation of the launch of a public digital euro. The proposals agreed in this regard refer to two regulations that establish the legal framework for the possible issuance of a digital euro, as well as the protection of cash in the region.
Thus, the digital euro would serve as a complement to cash, and would be available to both the general public and companies to make payments at any point and time in the area in which the euro is in force. It will be a public service directly supported by the European Central Bank (ECB), which would help preserve ECB money as an anchor for a payments system that works correctly and adequately.
According to the agreed proposal, the digital euro would be available both online and offline, and therefore could be used even without an Internet connection. In addition, it would allow payments and money transfers to be made with a high level of privacy. In addition, it would coexist with national and international private payment methods, such as cards and applications managed by private providers.
Once the Council of the EU and the European Parliament adopt the proposal to implement its legal framework, it will be the ECB that will make the decision whether or not to issue the digital euro. But everything indicates that its decision will be favorable, since its representatives have recently indicated that the digital euro could come into operation throughout 2029.
Furthermore, to prevent the digital euro from being used as a store of value, and having repercussions on the stability of finances, the proposal places limits on the total amount of digital euros that can be held in online digital accounts, as well as in digital wallets. The limits, still to be decided, will be set by the ECB, and must respect a global maximum limit that will be agreed upon by the Council of the EU, and which will be renewed at least every two years.
Payment service providers will not be able to charge consumers for different mandatory services: opening and closing accounts, payment transactions in digital euros from their account or wallet, or funding and “defunding” their digital euro accounts or wallets with money from their other deposit accounts at the same payment service provider. That said, there are different value-added services that could be subject to commissions.
On the other hand, a framework has been established that will guarantee that providers of digital euro interfaces and services will have access to the hardware and software of mobile device manufacturers, in order to guarantee them equitable access.
Regarding the compensation of payment service providers, during a minimum transitional period of five years, exchange commissions and merchant service expenses will have a maximum limit based on the commissions of comparable payment methods. Once the transitional period has ended, the maximum commission limits will be set based on the real costs associated with the digital euro.
Of course, the euro in physical cash, according to current EU legislation, must be generally available and accepted to pay for services and goods, as well as for the payment of debts, except for exceptions that are well defined and controlled. Among them, payments for goods or services made remotely, including online payments, and at points of sale that do not have physical staff.
The EU expects member countries to implement a cash resilience plan, or failing that, to adopt measures for situations of widespread and serious disruptions to the continuity of electronic payment methods.
The next step that the EU Council will take after the establishment of a common position in the region regarding the digital euro, is start negotiations with the European Parliament on the sameas well as on the legal tender nature of cash.
