EU Lawmakers Question Digital Euro As ECB Renews Proposal
The is pushing harder for a digital euro, saying it is an essential backup payment system during times of crisis. Piero Cipollone, a member of the ECB board, that the digital euro would ensure that all Europeans have access to a free, widely accepted way to pay online, even during significant issues such as cyberattacks or geopolitical tensions.
The plan, which has been discussed since 2023, aims to reduce the EU’s reliance on non-European payment processors, such as , which are the most widely used payment methods in the EU. The ECB may be ready to launch by 2029, provided the law is passed by mid-2026 and the necessary infrastructure is in place.
Main Focus: Privacy Issues
EU politicians are concerned about how the will impact people’s privacy. Some others worry that a centralized digital currency could make it too simple to track financial transactions. Cipollone said that these worries were unfounded because the ECB would not have access to personal data, which meant that neither the payer nor the payee could be recognised.
A significant aspect of protecting privacy was the inclusion of an offline payment option, designed to resemble currency, which allowed people to remain anonymous. Some members of parliament, on the other hand, remain uncertain whether these protections are sufficiently robust to prevent data misuse over time.
Risks for Business Banks
The potential effects on commercial banks are another significant area of disagreement. Lawmakers are concerned that providing people with risk-free digital euro accounts guaranteed by the ECB could lead private banks to incur losses, potentially destabilizing the financial industry.
Pierre Pimpie of the Eurosceptic organisation Patriots for Europe said that private bank accounts could be “emptied” if people choose ECB-backed accounts because they think they are securer. To mitigate this risk, the has proposed a limit on the amount of digital euros each person can hold. Critics like Pimpie, on the other hand, argue that this cap may be adjusted during a crisis, which would disproportionately harm private banks.
hardys With The Law and a Timeline For The Future
The digital euro faces a challenging road ahead in the European Parliament, where delays are expected due to political issues and the upcoming 2024 elections. Cipollone said he hoped the law would be finished by June 2026, but talks between the , Commission, and Council could push back the deadlines.
The ECB believes that if the plan is adopted, it will take two to three years to develop the necessary technology. This will change the way payments work in Europe.
