Digital Euro to be Free and Accessible to All, ECB Announces

•The Digital Euro will be free to use and accessible to all, but lawmakers will decide what personal information the bank will have access to.
•The European Central Bank (ECB) started studying the digital euro in October 2021, and hopes to complete the preliminary phase of the project by 2023.
•The ECB could develop its own standalone payment app or allow private banks to incorporate the digital euro into their systems as intermediaries.

The European Central Bank (ECB) announced on Jan. 23 that the Digital Euro will be free to use and accessible to all, but it would be the lawmakers who will decide what personal information the bank will have access to. Fabio Panetta, Member of the ECB’s Executive Board, stated that it will be up to the co-legislators to establish the optimal balance between the protection of privacy and the achievement of other important objectives of a public nature. These objectives include the fight against money laundering, the financing of terrorism, and tax evasion or compliance with any sanctions.

The ECB began studying the digital euro in October 2021, and by 2023, hopes to complete the preliminary phase of the project. The European Commission will then submit its legislative proposal regarding the digital euro.

The researchers recommended a supervised intermediary approach for the digital euro, instead of a direct-to-central bank model. The ECB believes supervised intermediaries are in the best position to identify use cases for conditional payments and other advanced payment services. To this end, the ECB could develop its own standalone payment app or allow private banks to incorporate the digital euro into their systems as intermediaries.

The digital euro could help promote greater financial inclusion, competition, and innovation in the European payments market, especially for those who are not currently using traditional banking services. The digital euro could also reduce the cost of cross-border payments in the Eurozone, both for individuals and businesses.

The ECB is currently consulting with the public and private stakeholders to determine the potential benefits, risks, and design features of the digital euro. It is also exploring the legal and technical aspects of the project. It is expected that the digital euro will be ready for use by the end of 2023.