The European Commission (“Commission”) published its ‘Single Currency Package’ on 28 June 2023 with proposals to establish a legal framework for the creation of a potential digital euro alongside the cash euro. The Commission’s press release and ‘digital currency package’ are available here and here respectively.
The Commission has proposed mutually supportive sets of measures to support the use of cash and propose a framework for a digital euro. The proposals cover:
- the legal tender of euro cash, which aims to safeguard the role of cash, ensure cash is widely accepted as a means of payment and remains easily accessible across the euro area; and
- establishing the legal framework for a potential digital euro to complement existing euro cash.
The proposals are accompanied by an impact assessment and its executive summary, which are available here and here respectively.
The potential digital euro would be a central bank digital currency (“CBDC”). It would be available alongside existing private means of digital payment, such as cards or electronic banking applications. The Commission proposes that the digital euro would function like a digital wallet and be available both online and offline.
The Commission noted that the European Central Bank will have to undertake a significant amount of technical work to progress the digital euro and it would only be able to issue the digital euro as a CBDC after its acceptance by both the European Parliament and Council. We expect that the Commission will shortly invite public feedback on the proposals via its Have Your Say platform.
