The European Commission today presented two proposals aimed at ensuring that citizens and businesses can continue to have and pay with euro notes and coins across the euro area, and to set out a framework for a possible new digital form of the euro, which the European Central Bank could issue in the future, in addition to cash.

The euro remains a symbol of the unity and strength of Europe. For more than two decades, individuals and businesses have been accustomed to paying with euro coins and notes, throughout the euro zone and beyond. While 60% of respondents would like to continue to be able to use cash, a growing number of individuals are opting for digital payment methods, in the form of cards and apps issued by banks or other digital and financial companies. This trend has accelerated as a result of the COVID-19 pandemic.

It is to take these trends into account that the Commission has today proposed two sets of measures, which reinforce each other, so that anyone wishing to pay with central bank money has the choice between the two solutions: cash and digital:

  • a legislative proposal on the legal tender of euro cash aims to maintain the role of cash, ensuring that it is widely accepted as a means of payment and remains easy to obtain for citizens and businesses across the euro area;
  • a legislative proposal defines a legal framework for the circulation of a possible digital euro in addition to euro notes and coins. Citizens and businesses would thus have an additional solution allowing them to use an economical, secure and reliable digital payment method in the euro zone, based on a form of public currency accepted everywhere, and which would complement the already existing private solutions. . Once adopted by the European Parliament and the Council, this proposal would create a legal framework for the digital euro, but it will ultimately be up to the European Central Bank to decide whether to issue a digital euro, and when.

The package in detail

Legal tender of euro notes and coins

Euro cash is legal tender in the Eurozone. The relevant proposal aims to clarify this notion in legislation, focusing on two 'A's', namely acceptance and accessibility (of cash). Although cash is generally well accepted in the euro area, problems have emerged in some Member States and sectors. At the same time, some people find it difficult to obtain cash, for example due to the closure of ATMs or bank branches.

The proposal presented today aims to maintain this level of general acceptance of cash across the euro area; it will also ensure that citizens can obtain enough cash to be able to pay in cash if they wish.

Member States will need to ensure that cash payments are widely accepted and that cash withdrawal possibilities are real and sufficient. They will need to monitor and report on developments and take action to remedy any potential problems. The Commission could, if necessary, intervene to specify the measures to be taken.

This proposal will guarantee all euro area citizens the freedom to choose the payment method they prefer and access to basic local services. It will ensure the financial inclusion of vulnerable groups who tend to prefer to pay in cash, such as the elderly.

Digital Euro

To adapt to the general digitalization of the economy, the European Central Bank (ECB), like many other central banks around the world, is studying the possibility of putting a digital euro into circulation, in addition to cash. This digital euro would offer consumers a new payment solution valid on a European scale, in addition to existing solutions. The range of choices for consumers would be broadened, and the international role of the euro would be strengthened.

Like cash today, the digital euro would coexist with existing national and international private payment methods, such as cards or apps. It would work like a digital wallet. It could be used by citizens and businesses for their payments, at any time and throughout the euro area.

Note that it would allow you to pay both online and offline, that is to say directly from one device to another, without an internet connection, from a remote location or an underground car park. Online transactions would offer the same level of data privacy as existing digital payment methods; offline payments, on the other hand, would guarantee users a high degree of protection of their privacy and data: they could make digital payments by communicating less personal data than they do today when they pay by card, just like when they pay with cash, or like when they withdraw money from an ATM. No one would be able to see what they pay offline in digital euros.

The digital euro would be distributed to citizens and businesses by banks and other payment service providers across the EU. Individuals would benefit from basic services in digital euros free of charge. To support financial inclusion, people without a bank account could open and hold an account with a post office or other public entity, such as a local government. The digital euro would also be easy to use, including by people with disabilities.

Merchants would be required to accept it across the eurozone, except for very small merchants who prefer to refuse digital payments (due to the disproportionate cost of new infrastructure for receiving digital euro payments).

The digital euro could also provide a good basis for other innovations, allowing banks to offer their customers innovative solutions, for example.

A widely available and widely used central bank digital currency would also be important for the EU's monetary sovereignty, especially if other central banks around the world begin to develop their own digital currencies. Finally, it is also important against the backdrop of the development of the cryptocurrency market.

The proposal presented today defines the legal framework and the main elements of the digital euro, which, after adoption by the European Parliament and the Council, would allow the European Central Bank to eventually put into circulation a usable and available digital euro in large scale. It will be up to it to decide whether and when to introduce the digital euro. This project will require significant additional technical work.

Context

In recent years, the European Commission, in close collaboration with the European Central Bank, has reviewed, at a technical level, a range of public policy, legal and technical issues relating to the digital euro.

For more information

Questions and answers

Information sheet

Legislative texts

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