The European Union Urged to Take Time on Draft Law for Digital Euro

The European Union’s financial services chief, Mairead McGuinness, has stated that a proposed law to establish a digital euro should not be rushed ahead of the upcoming European Parliament elections. Instead, McGuinness believes it should be carefully and thoroughly examined the new Commission after the elections next June.

The draft law aims to create a digital euro that is similar to cash, allowing for offline usability and preserving public money. However, the legislative process tends to slow down before elections and until a new EU executive is appointed.

While the European Commission has proposed a framework for a digital euro, it is ultimately the decision of the European Central Bank (ECB) whether to proceed with its issuance. The ECB is expected to make this decision in October. The digital euro is intended to address the scarcity of European payment service providers and the declining use of cash.

McGuinness emphasizes the importance of having a digital form of public money, especially as cash becomes less frequently used. As people increasingly rely on cards, phones, and e-commerce for transactions, the presence of public money in a digital format becomes necessary. She believes that failing to have a digital version of public money in the future would create a significant gap in the system.

Offering a choice for consumers is a key aspect of the Commission’s proposal for the digital euro. Measures will be put in place to ensure that cash remains accessible and useful, alongside the introduction of a digital alternative.

Positive Money Europe, a non-profit organization, sees the digital euro as essential in providing a “safe and accessible” form of public money. They argue that the decreased acceptance of cash limits people’s access to an anonymous means of payment, resulting in increased transfer of personal data to payment service providers.

In conclusion, the European Union should take the necessary time to thoroughly assess the proposed draft law for a digital euro before rushing its implementation. The decision of whether to issue a digital euro lies with the European Central Bank, with a decision expected in October. Providing a choice for consumers and maintaining the accessibility of cash are essential considerations in the pursuit of a digital euro.

Definitions:
– Digital euro: A digital version of Europe’s common currency, the euro, that can be used for online and offline transactions.
– European Parliament: The directly elected legislative body of the European Union.
– European Commission: The executive branch of the European Union, responsible for proposing legislation and implementing decisions.
– European Central Bank (ECB): The central bank of the euro area countries, responsible for monetary policy and the issuance of the euro.

Sources:
– Bruegel Conference
– Positive Money Europe Report (June)