- The digital euro will be available for online and offline payments, per the European Central Bank (ECB).
- Cipollone revealed that the ECB is currently finalizing the digital euro rulebook.
- The digital euro will not replace cash but will be an alternative payment method that would benefit smaller merchants.
Executive Committee member of the ECB Piero Cipollone stressed that adopting the digital euro will bolster Europe’s single market, competitiveness, and sovereignty.
Key Benefits of Digital Euro
At the European Parliament’s Economic Affairs Committee hearing, Cipollone highlighted that card payments, like Mastercard and Visa, now account for 64% of all transactions in the eurozone, which costs local merchants a lot.
The digital euro will benefit small merchants who often struggle to negotiate better conditions from payment providers, incurring charges nearly four times higher than their larger counterparts.
The digital euro will be accessible via online banking and for both online and offline payments. Personal transaction details of offline payments will only be known to the payee and the payer, offering a cash-like level of privacy.
Besides technical aspects, the ECB is now working on the digital euro rulebook and is selecting partners to develop the digital euro’s infrastructure and platform.
A digital euro will not replace cash but will exist alongside it in response to the growing preference for digital payments.
The digital euro provides a cheaper and simpler payment solution, granting small businesses greater control over their financial terms. It will also be accessible to everyone in the euro area, enhancing financial inclusion.
How Does The Digital Euro Work?
The digital euro would allow individuals to make secure instant payments online and offline.
Here’s how the ECB proposes it could work:
- Set up a digital euro wallet through your bank.
- Add money into your digital euro wallet by depositing cash or transferring it from a linked bank account.
- Start making payments using your digital euro.
Cipolloni also touched on data privacy and protection. He revealed that ensuring user’s privacy ‘has been a central focus of the digital euro project,’ as the digital asset is expected to provide ‘the best possible’ data protection.
However, the digital euro has sparked mixed reactions, with the main concerns being centralized control, data collection, and transaction traceability.
Looking Ahead
The decision on whether to issue a digital euro is up to the ECB’s Governing Council.
By the end of 2025, we’ll see if the project is ready for its next phase and how it will impact Europe’s financial infrastructure.
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Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
