The European Commission announced that it’s planning to propose a bill that will serve as the legal foundation for the European Central Bank’s ongoing technical work for a digital euro early in 2023.
In Brief:
- Digital Euro prototype by 2023 and is ready by 2025 if considered worth minting.
- The scope for everyday payments through digital euro will be considered.
- A legislative consultation announcement will be made in the forthcoming weeks.
A digital euro would be the EU’s version of a digital currency issued by a central bank (CBDC). A CBDC is a digital representation of a fiat currency (such as the euro or the US dollar) that is backed by a central bank.
The Eurozone governors will then decide whether it is worthwhile to mint a digital euro. If they succeed, the virtual currency could be ready by 2025, at the very least.
The bill will also include full EU-wide coverage of instant payments through
Sepa Instant credit transfer, with the goal of addressing the fragmented market for cross-border real-time payments and encouraging open banking initiatives throughout the European Union.
EU finance Chief Mairead McGuinness will announce the Commission’s legislative plans at a fintech conference in the coming weeks.
ECB Executive Board member Fabio Panetta told Members of European Parliament in mid-November: “If we don’t satisfy this demand, then others will do it”.
Policymakers have started to conduct these trials due to the growing popularity of cryptocurrencies and because of pressure from tech giants, who are developing new payment methods with digital assets. India’s finance ministry, meanwhile, has specified that crypto assets will not have authorization and the digital rupee will be the only legal tender among all digital currencies.
