Digital Euro. Credit line: Sergei Babenko / Alamy / Profimedia
On February 10, the European Parliament approved two key amendments that send a strong political signal of support for the introduction of a digital euro.
The main points of the resolutions
MEPs explicitly supported the creation of a digital euro, seeing it as essential for strengthening the EU's monetary sovereignty, reducing the fragmentation of retail payments and supporting the integrity and resilience of the single market.
They called for the digital euro to work both online and offline and to guarantee “universal access to payments” and broad acceptance by merchants across the Union.
The EU Parliament implicitly requested the rejection of any alternative proposal, such as the one advanced by the rapporteur for the regulation, Ferdinando Navarrete, who sought to prioritize the creation of a private pan-European payment network, writes Corriere della Sera.
What is digital euro?
The digital euro would be a digital form of cash, issued directly by the European Central Bank, just like physical banknotes and coins. It would have legal tender – meaning its acceptance would be mandatory – would work both online and offline and could be exchanged between individuals, or spent via an app in stores and on e-commerce sites.
The project studied by the ECB has already been approved by the European Commission and the European Council. The regulation for its issuance must now be approved by the European Parliament.
How will the money be spent?
Every citizen will have the right to open a digital account in euros at a bank or at another payment intermediary. For those who do not have access to traditional banking services, a kind of “universal service” will be provided for the euro account, which in Italy could be offered by the Post Office.
How will the account be funded?
The account can be funded through a traditional bank deposit or through cash deposits. This can then be used to pay with the card, through the digital euro app, or through the intermediary bank's app.
How many digital euros can a person hold in their account?
A limit has not yet been set, with estimates ranging from a few hundred to three million euros. This does not mean that goods exceeding the holding limit cannot be purchased with digital euros: any excess amount will be “reclaimed” and converted from the consumer's regular checking account. For merchants the limit will be zero, so any digital euro collected will be immediately transferred to their traditional account.
What is the purpose of this limit?
The aim is to prevent the introduction of the digital euro from draining bank deposits and consequently blocking lending to families and businesses. The digital account in euros must not become an alternative to traditional accounts, replacing European banks, which do not have a unified position vis-à-vis this project. Italian banks are in favor, provided that investments in infrastructure development are repaid through appropriate remuneration mechanisms. French and German banks, however, are more critical. (Material produced with the support of Rador Radio Romania)
