The Eurogroup has continued its investigation into the potential of a digital euro, stating that it should complement and not replace cash.
The group believes that the Central Bank Digital Currency (CBDC) project should be inclusive through the support of the European Central Bank (ECB) and the European Commission (EC).
The Eurogroup further details that the digital euro should guarantee access to central bank money for all European customers, with additional aims to bolster the adoption of digital payments, along with appropriate security and privacy measures to be set in place.
The investigation into a digital euro, which began in October 2021 and ends in October 2023, was updated last December and unveiled plans to build a potential rulebook on the digital euro, which is expected to commence this month.
Some of the digital euro’s main features and design choices are being decided by political figures along with a legal framework from the European Parliament, European Union, and the EC.
A Eurogroup statement read: “Depending on its design, a digital euro could play a key role in an increasingly digitised economy by strengthening the open strategic autonomy of the European Union, reflecting the central geopolitical role played by payment systems, in fostering financial sector innovation and delivering benefits for citizens, businesses, and Member States, while preserving the role of central bank money as an anchor for our monetary system.
“To succeed, the digital euro should ensure and maintain users’ trust, for which privacy is a key dimension and a fundamental right. At the same time, the Eurogroup also considered that the design of a digital euro should comply with other policy objectives such as preventing money laundering, illicit financing, tax evasion, and ensuring sanctions compliance.
“The Eurogroup also supports the exploration of an offline functionality which would serve a wider range of use cases and also contribute to financial inclusion by facilitating the use by citizens in different scenarios.”
The group believes that a digital euro can be a ‘catalyst for innovation’ for the continent’s financial sector once intermediaries are established.
The CBDC has also been revealed as a vehicle for ‘state-of-the-art payment solutions’, bolstering automatic payments across Europe. The report does stress however that the digital euro must be compatible with fiat currencies for banknotes and commercial bank deposits.
A pending legislative proposal from the EC would establish the digital euro and regulate its main features, subject to the decision of the co-legislators.