The introduction of the digital euro, which could be implemented as early as 2028, does not mean the abolition of cash, euro banknotes and coins - on the contrary, the European Parliament regulation will additionally ensure the status and security of the use of cash, the Croatian National Bank (HNB) stressed on Wednesday, writes HRT.
Given the increased interest of the public, citizens and the media, the CNB once again emphasized that the planned introduction of the digital euro does not mean the abolition of cash, euro banknotes and coins.
- The role of cash has been a subject of considerable public debate in recent years, particularly as the rise of digital payments, caused by the coronavirus pandemic, has reduced its share in everyday transactions, raising concerns about its future. However, demand for cash has remained strong across all age groups, according to the CNB.
And the results of the 2024 survey on the payment habits of consumers in the euro area show that Europeans want to keep the option of paying in cash, so they expect it to remain available in the future.
In this context, the CNB notes, the European Central Bank (ECB) and the European Commission are working on strategies to protect euro cash and adapt it to the future.
Thus, in June 2023, the Commission published the Single Currency Package, which includes two key legislative proposals - one to protect the status of euro banknotes and coins as legal tender (Regulation on euro banknotes and coins as legal tender) and the other for the digital euro (Regulation on the digital euro).
The digital euro, euro banknotes and euro coins will complement each other
The digital euro, euro banknotes and euro coins will complement each other, expanding the range of available payment options by offering cash in physical and digital form, the CNB points out.
They also say that the ECB, like the CNB, supports the Commission's proposal for a regulation governing the legal tender status of euro banknotes and coins. They explain that the regulation will clearly establish that merchants and service providers must in principle accept cash, except in exceptional cases, for example if another payment method has been agreed in advance.
The regulation will also oblige euro area member states to provide citizens and businesses with sufficient places to withdraw and deposit cash, for example through ATMs, bank branches or other channels, so that cash remains easily accessible to everyone, including those who rely exclusively on it.
- The goal is to preserve cash as an inclusive, safe and reliable means of payment, which will continue to stand alongside digital forms of payment in the future, the CNB says.
The ECB has also launched a competition to design a new series of euro banknotes, which will be more modern and secure. This further demonstrates the continued commitment to the future of cash and its key role as a reliable means of payment and store of value, both within the euro area and beyond, the CNB said.
Cash plays a key role in maintaining the resilience of payment systems
They also state that the use of cash achieves financial inclusion and plays a key role in maintaining the resilience of payment systems and economies. In times of crisis, such as during cyberattacks or power outages, cash is a reliable alternative, as was also seen during the natural disasters that hit parts of the euro area last year.
- The Eurosystem is therefore committed to ensuring that cash remains a widely available and accepted means of payment for all European residents, they say.
They also note that the proposal for a regulation of the European Parliament and of the Council on euro banknotes and coins as legal tender has been drafted and is currently being agreed upon by the member states. The European Parliament is expected to adopt this regulation and the regulation on the introduction of the digital euro by the end of this year.
The CNB reminds that the digital euro is a digital currency that would be issued by the Eurosystem, the European Central Bank (ECB) and the national central banks of those EU member states that have adopted the euro. The idea of introducing the digital euro as a central bank digital currency for euro area citizens arose in response to the growing demand for safe and reliable electronic payments in Europe.
Privacy is one of the most important features of the digital euro
Citizens would use the digital euro in everyday transactions and pay with it using a card or a mobile application or any third-party medium that, at the time of the digital euro's issuance, technologically meets the conditions set by the legislative proposal and is also easy and safe to use. It will be available, reliable, safe, efficient and made in accordance with the law, and the highest level of privacy protection will be guaranteed during its use, says the CNB's press release.
It is also emphasized that the digital euro would serve consumers for payment, and would not have the function of a bank deposit on which interest is paid. "Therefore, claims that negative interest could be charged on the account for the digital euro are unfounded. Statements that the digital euro will be able to influence investments by making it impossible to invest in a particular stock/security are also incorrect," say the CNB.
Consumers would be able to make secure instant payments in digital euros at physical and online points of sale and between consumers, regardless of which euro area country they are in and regardless of the payment service provider. The first step would be to open a digital euro wallet with a bank or other licensed electronic payment intermediary. Once your digital wallet is ready, you could deposit money into it via a linked bank account or deposit cash into it. You could then start making payments in digital euros from your digital wallet, the central bank explains.
The digital euro will be able to be used for both online and offline payments, which means that it will be able to be used in situations of limited connectivity, or it will also be able to serve as an emergency means of payment, or in cases of unforeseen or extraordinary circumstances.
The CNB specifically emphasizes that privacy is one of the most important features of the digital euro. The ECB and the CNB, or the Eurosystem in their role as the owner of the payment scheme and the executor of settlements for digital euro transactions, will not be able to access or store users' personal data, they say.
The digital euro project is currently in the preparation phase, which includes the development of technical infrastructure, legislative framework and research into user preferences. By the end of 2025, the ECB should make a decision on moving to the next phase, but the final introduction will depend on the outcome of the democratic process in the European Parliament, the CNB concludes.
Source: HRT
Photo: HINA/Edvard Šušak
