With this move, the European Commission aims to open up the payments market controlled by banks, Visa and Mastercard.
On June 28, the European Commission announced it had proposed a legislative plan for a digital euro, aiming to make it a widely accepted and easily accessible form of payment.
The announcement emphasized that allowing individuals to obtain digital euros through their banks upon request ensures easy accessibility and prevents citizens from being left behind. The proposal also includes provisions for free basic digital euro services, privacy protection and offline payments.
In a separate proposal, the commission suggested that banks, insurers and funds should share customer data with fintech companies in exchange for compensation, aiming to promote the advancement of digital finance. Under this proposal, companies holding customer data must promptly and continuously share it with participating companies upon customer request, ensuring real-time access to the information.
With this move, the commission aims to open up the payments market controlled by banks, Visa and Mastercard, which is now facing competition from fintech companies offering alternative services. Furthermore, the proposed legislation prioritizes user privacy and data protection, while minimizing the risks of money laundering and terrorist financing.
The European Central Bank (ECB) welcomed the commission’s proposal to ensure that cash remains a vital part of the payments system. It supported the commission’s proposal to safeguard the legal tender status of cash euros. ECB President Christine Lagarde said:
The investigation phase of the project will be completed by October 2023, after which the ECB will proceed with further development and testing. The ECB will further develop and test the technical solutions and business arrangements in the next phase.
A possible decision by the Governing Council to issue a digital euro would be taken only after the legislative act is adopted.