The Importance of a Digital Euro for Europe

The digital euro is an essential step in keeping our monetary system up to date with digital advancements. It will be easily accessible and user-friendly, while also maintaining privacy, similar to cash. Society has been transformed by digitalization in ways unimaginable just a decade ago, and this has influenced how we make payments. The COVID-19 pandemic has further accelerated the shift towards digital payments. Central banks worldwide are working on introducing a digital version of public money, known as a central bank digital currency. In the euro area, the digital euro would provide a digital payment solution that is available to everyone, everywhere, and free of charge. While cash remains important for small in-store and person-to-person payments, its usage is declining in many parts of the world, including Europe. Adapting cash to the digital age is the logical next step as we move towards a true digital economy. Offering both a cash euro and a digital euro ensures that everyone has the choice to pay digitally, preventing anyone from being left behind in the digitalization of payments. The digital euro would bring practical advantages for consumers, such as simplicity, cost-free transactions, and the ability to pay offline. Privacy is a crucial aspect of the digital euro, with the European Central Bank (ECB) not having access to users’ personal details or payment patterns. Additionally, the digital euro would promote competition, leading to reduced fees for consumers. It would also act as a springboard for the development of new pan-European payment and financial services, stimulating innovation and facilitating competition with non-European financial and technology firms. Having a digital euro is strategically advantageous for Europe, as it ensures the region remains competitive and maintains monetary sovereignty. It also enhances the integrity and safety of the European payment system, making it more resilient to disruptions and attacks on critical infrastructure. The European Commission has presented its legal proposal for the digital euro, and the ECB will complete its investigation phase on the currency’s design and distribution. The ECB will then decide whether to initiate a preparation phase for developing and testing the digital euro. Central bank money is the foundation of trust in all forms of money and the stability of our payment system. Whether in cash or digital form, the euro will remain a euro, preserving the role of central bank money. It is crucial to ensure that our monetary system, with the euro at its core, keeps pace with digital advancements, and we are committed to making that happen.

Read more