Moving Towards the Digital Euro

Distinguishing Between Public and Private Money

Central bank money, such as banknotes and coins, represents public money and reflects the monetary sovereignty of a country. In contrast, private money is created by commercial banks and includes bank deposits and loans. Payments with private money can be made via credit cards or online services.

Benefits of the Digital Euro

The digital euro is designed to complement cash and ensure access to central bank money even as digital payments become more prevalent. It could foster innovation, enhance the EU's strategic autonomy, and provide higher privacy protection compared to other digital payment methods.

Steps Towards Implementation

Since 2020, the ECB has been exploring the possibilities and benefits of the digital euro. In 2021, the investigation phase was launched, focusing on technical and conceptual issues related to the distribution of the digital euro. Based on these findings, the ECB decided in October 2023 to proceed to the preparation and testing phase, which is expected to last approximately three years.

Legislation and Future Prospects

In June 2023, the European Commission presented legislative proposals for the digital euro, aiming to make it function alongside cash and be accessible to the general public. These proposals include the creation of a digital wallet for payments within the euro area and establishing a legal framework for its introduction.

The digital euro project has strong strategic motivations, given the anticipated evolution of payment technologies in the coming decades. Security, privacy, and inclusiveness are key values that the digital euro must uphold.

Discussions on the package of proposals related to the digital euro and the status of euro cash as legal tender have been initiated by the Council Presidency at the Economic and Financial Affairs Council meetings.