BRUSSELS: The European Union (EU) believes a digital euro is the answer to cutting its addiction to United States payment systems like Visa and Mastercard, as well as Apple Pay and Google Pay, as the bloc seeks to favour European firms over others.
Brussels hopes it could provide an alternative local option for any payments in shops or online since people could easily pay, just like other systems, using a card, an app or via their banking app.
The EU will move one step closer on Tuesday (Jun 23) to creating a digital euro when EU lawmakers hold a long-awaited vote on the virtual currency.
The European Central Bank (ECB) first suggested the digital euro in 2020 because Europe lacked its own system before the EU executive made its formal proposal.
The digital euro cannot be created without the rules underpinning the project being approved by the EU capitals and the European Parliament.
WHAT IS THE DIGITAL EURO?
Don’t confuse it with your cash in the bank. When you use your bank card, Apple or Google Pay, you pay with physical money that exists in your account.
Instead, your digital euros would be in a separate virtual wallet.
The ECB hopes the digital euro will be available to citizens in 2029 if the EU negotiators greenlight the rules by the end of the year.
If that timeline sticks, the ECB is ready to launch a pilot programme in mid-2027 to test how it would work in practice.
Some say that is too long, but “banks and merchants need time to prepare so they can roll it out smoothly and at scale”, Alessandro Giovannini, advisor to the digital euro director at the ECB told AFP.
HOW WILL IT WORK?
Digital euros will have the same value as cash and banknotes.
Any user would need to create an account with a bank or a public institution like a post office, and transfer money into it from another account or via a cash deposit.
Users can then pay with digital euros in shops, online and between individuals using different methods including card, app or phone.
Officials stress the system would protect people’s privacy, with no possibility to identify who made transactions, and an offline mode that would be as confidential as using cash.
“It wouldn’t replace anything. Cash would still be available, and people could use existing private payment methods,” the ECB’s Giovannini said.
The digital euro would give more choice and let consumers “preserve their freedom to choose how to pay as daily life becomes more digital”, he added.
