Date: 20 February, 2024
Digital Euro Implementation
European Parliament’s LIBE Committee endorses legislation for the central bank digital currency, a major step towards digital euro implementation.
Key Points:
- European Parliament’s LIBE committee overwhelmingly endorses the latest digital euro report, supporting ECB’s CBDC.
- Draft legislation receives strong backing with 48 votes in favor, six against, and seven abstentions.
- Amendments in the bill address concerns from European banks and express support for permissionless blockchains.
- The digital euro initiative, initiated in June 2023, gained momentum with LIBE’s approval on February 15.
- Piero Cipollone, ECB Executive Board Member, praises the concept of a Europe-wide CBDC in a recent speech.
- Cipollone emphasizes the digital euro’s role in preserving citizens’ freedom to use a public means of payment.
- ECB commits to supporting legislative efforts, focusing on key issues in the preparation phase.
- The legislation addresses concerns about a €3,000 holding limit by transferring decision-making authority to banks and payment service providers.
- LIBE’s endorsement positions the digital euro bill for a full EU parliament vote, granting ECB authority for the CBDC issuance timeline.
- European Commission’s June 2023 legislative proposals aim to make the digital euro legal tender while safeguarding the role of cash.
- ECB enters the “preparation phase” in November 2023, conducting tests and experiments, with formal CBDC trials expected in Q2 2024.
- Rulebook Development Group seeks feedback in January to shape the draft rulebook for the digital euro.
- A full European Parliament vote on the digital euro anticipated post-EU elections in June 2024 marks a crucial step in potential CBDC implementation.
In a significant step towards the creation of a central bank digital currency (CBDC), the European Parliament’s Committee on Civil Liberties and Justice (LIBE) overwhelmingly endorsed the latest digital euro report. The proposed legislation, supporting the European Central Bank’s (ECB) digital euro, received a resounding 48 votes in favor, with only six against and seven abstentions.
The digital euro initiative, in progress since June 2023, gained momentum with the approval of the latest draft bill by LIBE on February 15. Amendments address concerns raised by European banks and express support for permissionless blockchains, allowing payment providers to use their wallets.
Piero Cipollone, Member of the ECB Executive Board, recently praised the idea of a Europe-wide CBDC in a speech to the EU Committee on Economic and Monetary Affairs. He emphasized that a digital euro, used freely across the euro area, would preserve citizens’ freedom to use a public means of payment, aligning with the fundamental right to access cash.
Cipollone assured the Committee of the ECB’s commitment to supporting legislative efforts, outlining key issues in the preparation phase. These include seeking digital euro platform providers, developing infrastructure, formulating a rulebook, ensuring financial system stability, and prioritizing privacy in digital payments.
The latest draft of the bill addressed concerns about a €3,000 holding limit by transferring decision-making authority to banks and payment service providers. The legislation mandates banks to offer basic CBDC services for free, acting as intermediaries without direct compensation.
With LIBE’s endorsement, the digital euro bill is poised for a full EU parliament vote. If approved, the ECB will gain the authority to determine the CBDC issuance timeline. The European Commission’s legislative proposals in June 2023 aimed to make the digital euro legal tender while safeguarding the role of cash.
The ECB entered the “preparation phase” in November 2023, testing technicalities and operational procedures. Formal CBDC experiments are expected to commence in Q2 2024. The ECB Governing Council, in collaboration with the European Commission, is working on the legal and legislative framework. The Rulebook Development Group (RDG) released an update in January, seeking feedback to shape the draft rulebook.
A full European Parliament vote on the digital euro may occur after the EU elections in June 2024, marking a pivotal moment in the potential implementation of the CBDC.
References:
https://coingeek.com/eu-parliamentary-committee-votes-in-favor-of-digital-euro-cbdc/
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