Antonio Tejeda Encinas, president of the Euro-American Digital Law Committee
As recently announced by the European Central Bank (ECB), the green light has been given to the preparation phase of the digital euro.
It is important to remember that the European Commission’s proposal for a European Union Regulation on the digital euro, which establishes the issuance possibilities, is being debated in the European Parliament.
The attached brochure, issued by the ECB, provides an illuminating insight into the key features of the developing digital euro project:
1. Offers a simple alternative to make everyday payments, compatible with a variety of devices such as smartphones, smartwatches and wallets.
2. It works as a digital option with characteristics similar to cash (without replacing it), allowing P2P payments in real time throughout the euro zone, both online and without an internet connection or mobile service.
3. Does not require a checking account or credit cards. It can be used with or without a linked bank account. In the second case, a wallet would be used (possibly provided by the ECB). Even without a wallet, it can be used with reloadable prepaid cards.
4. Offered as a free public service to all residents in the Eurozone.
5. Its objective is to strengthen the European Union with a public asset supported by the ECB, such as cash, providing an alternative to private payment solutions and reducing dependence on non-European means of payment.
6. The issuance is seen as a necessity to maintain the strength of the euro in the global financial scenario, in view of threats such as the Digital Yuan or possible stablecoins from large technology companies.
7. Privacy is considered fundamental, and it is ensured that the ECB will not collect, store or share personal transaction data.
8. The digital euro will not be programmable, meaning that its value cannot be changed or its use restricted. However, banking entities and payment service providers will be able to integrate services related to the digital euro.
9. It can be used in ATMs to exchange digital euros for cash and vice versa.
10. The ECB emphasizes that the digital euro is designed exclusively for making payments and not for investments or generating profits. A holding limit will be established, possibly between 3,000 and 4,000 euros per person. If an amount is received in excess of this limit, the excess will be transferred to a linked account if available, otherwise the transaction will be declined.
Taking these characteristics into account, the digital euro emerges as an alternative to cash, bank deposits, credit cards, payment solutions such as Bizum and stablecoins, offering a free and accessible means of digital payment, without requiring a current account, with a limited holding for small amounts.
