The potential issuance of fiat currency in digital form has attracted worldwide attention, with various jurisdictions exploring the concept. The EU, US and UK are among those actively considering implementing a CBDC.
A leaked draft of the Euro Digital Bill, which is expected to be proposed by the European Commission on June 28, reveals several important provisions that aim to shape the future of central bank digital currency (CBDC).
The draft bill, seen by CoinDesk, highlights key elements such as the prohibition of interest and surcharges, the availability of offline payments from the start, and the limitations of programmability. Notably, the bill affirms the status of the digital euro as legal tender, placing it on equal footing with traditional fiat currencies. This recognition ensures that shops and businesses must accept the digital euro as a valid means of payment.
According to the text seen by CoinDesk, the EU intends to make the digital euro available for online and offline transactions from its initial issuance. The regulations aim to ensure a level of privacy equal to that of withdrawing cash from an ATM in offline face-to-face interactions.
Notably, privacy has become an important area of public concern regarding CBDCs, as highlighted in a 2021 survey conducted by the European Central Bank (ECB). The proposed leaked Digital Euro Bill therefore acknowledges these concerns and aims to proactively address them.
While privacy is paramount, the leaked draft recognizes the importance of regulatory oversight in combating financial crimes such as money laundering. Under the proposed bill, neither the ECB nor payment service providers will have access to personal transaction data.
Additionally, in an effort to uphold the essence of fiat currency and maintain its freely usable nature, the bill stresses that the CBDC “must not be programmable.” The inclusion of this provision underscores the commitment to preserve the essential attributes of fiat money.
In addition, the bill includes provisions aimed at discouraging individuals from using digital euro accounts as a replacement for traditional commercial bank savings accounts. These measures aim to ensure that digital holdings in euros do not bear interest and allow additional controls to be imposed by the ECB.
To encourage primary use of the digital euro for day-to-day transactions, ECB executive board member Fabio Panetta suggested a cap of around 3,000 euros ($3,250) on individual holdings.
The digital euro: navigating lawmakers’ skepticism
The potential issuance of fiat currency in digital form has attracted worldwide attention, with various jurisdictions exploring the concept. The EU, US and UK are among those actively considering implementing a CBDC.
Remarkably, the ECB has conducted a detailed assessment of a CBDC, and a decision on its adoption is likely later this year. Fabio Panetta stresses that the decision to proceed with a CBDC should be a political decision, involving not only central bankers but also political considerations.
Overall, the introduction of a CBDC in the EU requires legislation that must be approved by both the European Parliament and the Council of the EU. However, members of the European Parliament have expressed reservations about the CBDC, and the Council seems unlikely to reject the initiative altogether.
Speaking anonymously on the matter, a senior EU official said the Council would not issue a joint opinion on the digital euro in the near future.
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Benjamin Godfrey is a blockchain enthusiast and journalist who loves to write about real-world applications of blockchain technology and innovations to drive mainstream acceptance and global uptake of emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain-based media and sites. Benjamin Godfrey is a sports and agriculture enthusiast.
