The potential issuance of fiat currency in digital form has received worldwide attention, with many jurisdictions exploring the concept. The European Union, the United States and the United Kingdom are among those actively considering implementing CBD.
A leaked draft of a proposed digital euro bill, set to be proposed by the European Commission on June 28, reveals several important provisions intended to shape the future of central bank digital currency (CBDC).
project of law , Visible By CoinDesk, it highlights key elements such as prohibitions on interest and surcharges, availability of offline payments from the start, and programmability limitations. Notably, the bill confirms the status of the digital euro as legal tender, placing it on par with traditional fiat currencies. This recognition ensures that shops and businesses must accept the digital euro as a valid payment method.
According to the text provided by CoinDesk, the EU intends to make the digital euro available for both online and offline transactions right from its initial issuance. The regulation aims to ensure a level of privacy equal to taking cash from ATMs during offline face-to-face interactions.
Notably, privacy has emerged as a significant area of public concern surrounding central bank digital currencies, as indicated by a 2021 survey by the European Central Bank (ECB). Therefore, the leaked draft of a proposed digital euro bill acknowledges these concerns and aims to address them proactively.
While privacy is of paramount importance, the leaked draft acknowledges the importance of regulatory oversight in combating financial crimes such as money laundering. According to the proposed bill, neither the European Central Bank nor payment service providers will have access to personal transaction data.
Also, in an effort to uphold the essence of fiat currency and preserve its freely usable nature, the bill asserts that the CBD “will not be programmable.” The inclusion of this clause underscores the commitment to preserving the essential features of the fiat currency.
In addition, the bill includes provisions that discourage individuals from using digital euro accounts as an alternative to traditional commercial bank savings accounts. These measures are intended to ensure that digital euro holdings do not incur interest and allow additional controls to be imposed by the European Central Bank.
To encourage the primary use of the digital euro in day-to-day transactions, European Central Bank executive board member Fabio Panetta has proposed a cap of around 3,000 euros ($3,250) on individual holdings.
The Digital Euro: Navigating Legislators’ Doubts
The potential issuance of fiat currency in digital form has received worldwide attention, with many jurisdictions exploring the concept. The European Union, the United States and the United Kingdom are among those actively considering implementing CBD.
Remarkably, the European Central Bank has carried out a detailed assessment of the CBD, and a decision on its adoption is likely to be made later this year. Fabio Panetta maintains that the decision to move forward with CBDCs must be a political one, involving not only central bankers but also political considerations.
In general, the introduction of CBD in the European Union requires legislation that must be approved by both the European Parliament and the Council of the European Union. However, MEPs have reservations about the CBD, and it seems unlikely that the Council will reject the initiative outright.
Speaking anonymously on the issue, a senior EU official indicated that the council would not formulate a common opinion on a digital euro in the near future.
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Benjamin Godfrey is a blockchain enthusiast and journalist who enjoys writing about real-world applications of blockchain technology and innovations to drive public acceptance and global integration of the emerging technology. His desires to educate people about cryptocurrencies have inspired his contributions to popular blockchain-based media and websites. Benjamin Godfrey is a fan of sports and farming.
