The Eurogroup goes back to the digital euro.

The Eurogroup returned again to the topic of a digital currency in its latest meeting this week, with a stocktake report on the advancement of the digital euro. 

As we explained in our article, the digital euro is a digital system of payments and transactions that would have the same properties as cash, but simply in a digital format. 

However, privacy and data protection remain crucial issues. At the last civil society meeting, the European Central Bank (ECB) officials affirmed that the ECB’s digital euro project is committed to the highest levels of privacy. Yet, according to the ECB’s plans, the digital euro will rely on private commercial intermediaries, which will have access to massive amounts of data. Moreover, tax evasion obligations and other legislative requirements make it difficult for digital payments to be entirely private. 

What is meant by digital currency?

The ECB is exploring the launch of a central bank digital currency for electronic payments. The ECB is now deeping the technical design of possible digital euro components and services. This tool has a huge potential, since it would allow European citizens to store money at the central bank in a risk-free way. 

However, the EU- and the ECB are not yet taking this opportunity seriously, being more concerned about the interests of commercial banks than the importance of such a free and accessible tool.

There are three main guidance points that the ECB should follow in order to design the digital euro as a public, secure means of payment:

1. This should be a free-of-charge and non-debt-based payment method;
2. Digital currency should not replace physical cash (your ability to use banknotes and coins should be protected);
3. Payments and transactions should respect citizens’ privacy.

A final report on the digital euro is expected in autumn 2023. After this investigation phase, the ECB Governing Council will decide whether to make a decision on the realisation phase. Will the ECB allow people to use safe and fair central bank money, or will it stand for commercial banks’ interests?