E fundit!

08:48 CRIME

Serious accident on the Kardhiq-Delvinë axis / One person dies, three others are injured

A serious accident occurred on the Kardhiq-Delvinë axis, i...

The EU plans to introduce the digital euro

2023-06-30 09:17:00, Kosova & Bota CNA

The European Commission announces plans regarding the introduction of the digital euro, which is expected to be introduced in 2027. This will bring the idea of ??introducing such a currency one step closer to realization.

On 28 June 2023, the European Commissioner for Financial Stability and Financial Services, Mairead McGuinness, presented the proposals for the digital euro and a parallel legal system that prepares the legal status regulations for the European government and the European Parliament.

This is just one of the many steps that must be taken. Even if national governments and the European Parliament support the plans, the European Central Bank (ECB) will ultimately decide whether to issue a digital euro. The ECB says it will make a final decision by the end of October 2023.

What is the digital euro?

The digital euro will only exist alongside the existing euro, as an additional form of online or electronic payment. Mairead McGuinness says the digital euro will be a "complement" to physical money and the euro itself.

It will be a purely digital or electronic form of the euro that cannot be converted into cash. The main difference between digital euro and online euro transactions is that digital euro payments can only be made electronically or digitally, while all standard online banking payments can be converted to cash.

The cover for the euro and the digital euro will be provided by the European Central Bank ECB. Users can probably buy digital euros from their existing commercial banks and hold them in a separate account.

Why does the EU want to launch a digital euro?

The rise of cryptocurrencies and other payment systems has intensified the debate over whether or not Central Banks should launch their own digital currencies. When Facebook announced in 2019 that it was planning its own virtual currency, some European policymakers worried that it could result in undermining the work of the ECB. In October 2020, the ECB launched a public consultation on the digital euro and from July 2021 it is considering different design options and user requests, while trying to determine how the digital euro would actually work in practice.

The EU says such a currency could "support the Eurosystem's objectives by giving citizens access to a secure form of money in a rapidly changing digital world". He also says that the digital Euro can take advantage of the technological advantages associated with other digital payment methods without the risks and instabilities associated with circulating cryptocurrencies.

"It is also the exact opposite of existing digital cryptocurrencies. The digital euro would be safe, secure and sound," McGuinness told the European Parliament in April.

Another reason given by the EU for the digital Euro is the declining use of cash. According to the ECB, cash payments for all point-of-sale transactions have fallen from 79% in 2016 to 59% in 2022. They expect this decline to accelerate in the coming years.

The EU also pointed to the growing use of so-called "Stablecoins" - cryptocurrencies pegged to other currencies. McGuinness says the EU believes that if it does not come up with its own solution in this area, the risk of "stablecoins" or digital currencies created by other central banks.

The digital "renminbi", a digital currency that China plans to introduce, is a particular cause for concern in this regard.

What does the law say?

The EU says the upcoming law will focus on the legality of the digital Euro, as well as privacy and financial stability issues. The bill was leaked and reported by several media outlets. The news portal "Coindesk" reports that the use of the digital Euro will be free, without interest and will have to be available for cash, for offline payments from the first day of use.

It is also planned that the digital Euro will be available to consumers and businesses from the beginning of its operation.

Is the digital Euro really necessary?

The EU appears to be interested in the project, but many critics say there is no need for a digital Euro. Markus Ferber, spokesman for the European People's Party parliamentary group in the European Parliament, said the bill appears technically correct but "doesn't answer the question: Why?"

Many say that the sharp decline in the value of cryptocurrencies over the past few years indicates that the apparent threat they posed to central banks has passed.

The banks themselves were not very enthusiastic about the introduction of the digital Euro. The European Banking Federation has suggested that the creation of such a system could lead to many investors trying to withdraw all their money at once from the bank, buying digital Euros with their ordinary Euros, as they will see them as a safe investment in times of crisis. With this in mind, the ECB is believed to be considering limiting the amount of digital Euros an individual can hold in their account to around €3,000.

What are the next steps?

The European Commission has suggested that the digital Euro could come into use in 2026 or 2027. But it still has a long way to go. The Eurogroup, made up of Eurozone finance ministers, has been debating the issue for two years and is believed to have serious concerns about how governments can justify introducing the digital Euro to their citizens, given that online and digital payment systems are known and work well.

If the law is accepted and there are no major political objections, the European Central Bank will decide whether to take it into the procedure or not. According to the ECB, the next phase envisages "the development of integrated services, as well as the testing and experimentation of the use of the digital euro". This phase can take about three years." The publication of the draft law will be the first major test to test the political mood regarding the introduction of the digital euro./ DW