The first proposal foresees that people could use basic digital euro services for free and offers private intermediaries appropriate economic incentives to distribute the digital euro as they do other digital means of payment, while preventing excessive fees for merchants.

It supports a high degree of privacy and data protection for users, while minimising money laundering and terrorist financing risks. It enables offline digital euro payments, to provide cash-like privacy levels.

“We look forward to continuing working together with other EU [European Union] institutions towards a digital euro to ensure our currency is fit for the digital age,” said European Central Bank president Christine Lagarde in a release.

The investigation phase of the digital euro project will conclude in October 2023. The ECB governing council will then decide whether to move to the next phase of the project.

In the next phase, ECB would further develop and test the technical solutions and business arrangements. A possible decision by the governing council to issue a digital euro would be taken only after the legislative act is adopted.

The second proposal aims to safeguard the continued and widespread acceptance of cash throughout the euro area and will also ensure that people have sufficient access to cash to be able to pay in cash if they so wish. Member States will need to ensure widespread acceptance of cash payments, as well as sufficient and effective access to cash.

The proposals will ensure that everyone in the euro area is free to choose their preferred payment method and has access to basic cash services. It will ensure the financial inclusion of vulnerable groups who tend to rely more on cash payments, such as older people, ECB said.

The European Commission has been working closely with ECB over the past few years to jointly review at technical level a broad range of policy, legal and technical questions on the digital euro.

Fibre2Fashion News Desk (DS)