The European Commission has published its legislative proposal establishing the legal framework for a possible digital euro, stressing that the CBDC would be a compliment to, not replacement for, cash.
A digital euro would be available alongside existing national and international private means of payment, such as cards or applications.
It would work like a digital wallet, with people and businesses able to pay with it anytime and anywhere in the euro area.
The euro would be available for payments both online and offline. While online transactions would offer the same level of data privacy as existing digital means of payments, offline payments would essentially be like paying with cash - with nobody able to see what people are paying for.
The digital euro would be distributed by banks and other payment service providers, with basic services provided to people free of charge. Merchants would be required to accept the digital currency unless they are cash-only firms.
The proposal still needs to be adopted by the European Parliament and Council before the European Central Bank decides whether to roll out a digital euro.
However, ECB executive board member Fabio Panetta has made clear that he favours such a development, writing in a blog: “The digital euro is a necessary step to ensure that our monetary system keeps up with digital advances. It will be widely accessible and easy to use while preserving privacy - just like cash.”
The EC is also moving to safeguard the continued and widespread acceptance of cash throughout the euro area.
Says a statement: “The proposal will ensure that everyone in the euro area is free to choose their preferred payment method and has access to basic cash services. It will ensure the financial inclusion of vulnerable groups who tend to rely more on cash payments, such as older people.”