EU lawmakers pave way for 'digital euro' negotiations
The digital euro has been touted as the EU's best chance at breaking its dependence on US payment systems like Visa and Mastercard, as well
The digital euro has been touted as the EU's best chance at breaking its dependence on US payment systems like Visa and Mastercard, as well as Apple Pay and Google Pay. The European Parliament on Thursday signaled its support for renewed negotiations to create a digital version of the bloc's currency, the euro. Some 416 delegates voted in favor, 169 against and 22 abstentions. Now lawmakers are scheduled to meet with member states to discuss the concept later this month. The EU parliament and member nations hope to reach a deal by the end of 2026. If they reach it, the European Central Bank (ECB) could make the digital euro available in 2029. The digital euro is being touted as a way for the bloc to break its dependence on US payment systems like Visa and Mastercard as well as Apple Pay and Google Pay.
According to the ECB, almost two-thirds of card payments in the eurozone are handled by non-European companies, mainly Visa and Mastercard. Moreover, some 13 out of 21 eurozone countries have no national card scheme for day-to-day payments in shops or online stores. How does the digital euro work? A digital euro would have the same value as cash and banknotes. To use them, an individual would need to create an account with a bank or a public entity like a post office and then transfer money or deposit into the account. Digital euros can be used to pay at stores, online and between individuals using different methods including card, app or phone. EU officials have said that the digital euro would protect people's privacy, by safeguarding the identity of those who use it. The digital euro would also have an offline mode that would be as confidential as using cash.
Would the digital euro signal the end of cash in Europe? To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video EU lawmaker Fernando Navarrete Rojas rejected rumors that the digital euro could be used "as a tool of control," stressing it would utilize "the highest privacy standards." Experts say the key challenge, however, is ensuring the digital euro does not behave like a full cash bank account. If it did, European banks could be drained of deposits — especially during a crisis such as a bank run — as consumers shift their savings into the digital euro. An alternative, not a requirement Alessandro Giovannini, advisor to the digital euro director at the ECB, said the digital euro would give more choice and let consumers "preserve their freedom to choose how to pay as daily life becomes more digital." "It wouldn't replace anything.
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