State of play of the digital Euro


As consumers increasingly pay digitally, the European Central Bank (ECB) has been investigating since 2021 the feasibility of introducing the digital euro, a central bank digital currency complementing physical cash. Over the past two years, the ECB underwent an ‘investigation phase’ during which it elaborated a high-level design for the digital euro. It would be widely accessible to citizens and merchants through distribution by supervised intermediaries, such as banks.

The envisaged design would be a digital form of cash, available both online and offline, offering high level of privacy, and which could be used for all digital payments throughout the euro area. On 18 October 2023, the ECB published a report summarising the findings of the ‘investigation phase’ and announced that it will enter the ‘preparation phase’ of the project. This new phase which started on 1 November 2023 will last two years and involve extensive testing. Efforts will be focused on laying down the foundations for the digital currency, finalising the rulebook and selecting providers to develop the necessary platform and infrastructure for its implementation.

To establish the dedicated legislative framework around the establishment of the digital euro, the European Commission published a legislative proposal on 28 June 2023. The proposal outlines various objectives, including securing the digital euro’s legal tender status in alignment with the intentions of the ECB. This would entail its mandatory acceptance by payees, such as merchants, with only limited exceptions (such as a right for microenterprise to refuse the digital euro, unless they accept comparable digital payment methods).

Furthermore, the proposal establishes an obligation for all payment services providers (PSPs) authorised in the EU to provide digital euro payment services. Digital euro users would have the flexibility to hold one or several digital euro payment accounts held in the same or different payment service providers. Notably, the digital euro as proposed by the European Commission would be inclusive, allowing individuals (though under very specific conditions) to open digital euro accounts without a traditional bank account.

According to the ordinary legislative procedure, the Council of the European Union and the European Parliament are currently working on their respective positions. In the European Parliament, it is the Committee on Economic and Monetary Affairs (ECON) which is in charge and MEP Stefan Berger (EPP, Germany) is spearheading the file as Rapporteur. The draft report has not yet been published, therefore inter-Committee negotiations will take place in early 2024 and hopefully the European Parliament will be able to adopt its position prior to the EU elections set on 6-9 June 2024.

In the Council, the Spanish Presidency already conducted several technical discussions on the proposal. Notably, Member States overall, as well as the Spanish Presidency, appear to be supportive of the idea of granting legal tender status to the digital euro. As of January 2024, the discussions will resume under the Belgian Presidency until a General Approach is reached, paving the way for inter-institutional negotiations (trilogues) to start, most likely, under the next mandate. Following the final adoption of the Regulation by co-legislators, the ECB will consider any changes to the design of the digital euro that may result from the legislative deliberations and it will finally decide whether or not a digital euro will be issued.

The voice of e-merchants in shaping the future of the digital euro is key. Ecommerce Europe believes that a digital euro, under the right conditions, could play a key role as a cost efficient and accessible cross-border payment solution. However, we fear that the legal tender status, as currently proposed by the European Commission, would inherently limit merchant’s ability to negotiate with intermediaries, potentially impacting the overall competitiveness of the solution. We fear a  situation in which merchants would be mandated to accept the digital euro as a payment method while having minimal control over its pricing. Instead of establishing immediate legal tender status, we call on the co-legislators to ensure that the roll out of the digital euro is conceived in a compelling way, providing room for innovation. In that regard, Ecommerce Europe raised concerns through a joint letter published in late November together with other merchants associations regarding the development of the remuneration model of the digital euro. We strongly believe that it is necessary to keep the cost of acceptance of the digital euro as close to zero as possible.

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