The European Commission’s proposals for the use of cash and the digital Euro contain similar content as a draft bill leaked earlier in June.
The European Union has published proposals that seek to preserve the use of cash in the region, while simultaneously setting a framework for the possible issuance of a digital euro. According to proposals by the European Commission, the aim is to ensure that banknotes and coins are still as accessible as ever while digital options are also supported.
The Commission said people in the EU have been transacting with euro coins and banknotes for over 20 years. While it wants this option to remain available, the publication notes that more people are now looking to digital payments. The European Commission stated:
“While 60% of people surveyed would like to continue to have the option to use cash, an increasing number of people are choosing to pay digitally, using cards and applications issued by banks and other digital and financial firms. This trend was accelerated by the COVID-19 pandemic.”
To cater to both sides of the divide, the Commission is proposing legislation that protects cash and also backs the digital Euro.
EU Proposals on Cash and Digital Currency Functioning Simultaneously
The first measure is a legislative proposal on the legal tender of Euro cash. This proposal is to “safeguard the role of cash”, ensuring its availability and acceptance as a means of payment.
The publication includes a second measure – a legislative proposal that creates a “legal framework for a possible digital Euro”. The European Commission notes that the digital Euro will complement coins and banknotes, and offer people an additional payment method. In addition, the digital Euro will be cheap, secure, and widely accepted. However, the Commission notes that it does not have the final say on digital Euro issuance.
“While today’s proposal – once adopted by the European Parliament and Council – would establish the legal framework for the digital Euro, it will ultimately be for the European Central Bank to decide if and when to issue the digital Euro,” explains the Commission.
The European Commission describes the digital Euro as a system that allows direct payments between devices, without an internet connection. These payments will ensure better data protection and privacy for users. The transactions will require less personal data than is necessary for card payments.
The proposals from the European Commission also states that the digital euro will be available from banks and registered payment service providers, with basic services free of charge. For financial inclusion, access to the digital Euro would not require bank accounts.
Furthermore, all merchants would have to accept digital euro payments. However, the law would exempt small merchants whose cost of setting up the required infrastructure would be high. The Commission also hopes that widespread use of the digital Euro would provide a basis for banks to create innovative solutions for customers.
Leaked Euro Bill
The provisions in the proposals for a digital Euro in the EU corroborate the specifics of a Digital Euro bill leaked last week. The draft bill to be proposed by the European Commission states that the digital Euro will support online payments, limit programmability, and run without interest or surcharges.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
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