Cash is king: Digital euro would not spell the end of physical currency
And Proposal Access Have Safeguard To Sufficient Will The Aims People The To Cash Ensure Acceptance Of Cash
As the European Commission puts forward proposals for a new digital form of the euro, people are being reassured it will not see the end of cash.
The commission has set out a framework for a possible digital form of the currency that would be used as a complement to cash.
Payments through cards and banking apps have been on the rise in recent years and saw a surge in use during the pandemic, but 60% of people would like to continue to have the option to pay with cash.
There has been concern the move away from cash could negatively impact vulnerable members of the community, such as older people, those with lower incomes or digital skills, and those without bank accounts such as asylum-seekers and refugees.
However, the digital euro proposal is part of a 'single currency package' which will ensure that people can still use euro banknotes and coins across the euro area.
The proposal aims to safeguard the acceptance of cash and will ensure people have sufficient access to cash.
The regulation will require member states to monitor cash acceptance levels as well as the levels of cash refusals and to take measures if acceptance of cash is not ensured.
It will also introduce an obligation to monitor cash access levels — an area of great concern as the number of physical bank branches and ATMs has been decreasing in many areas.
The European Central Bank (ECB) is joining other central banks around the world in investigating the possibility of introducing digital currency.
The commission said the move would be important for the EU's monetary sovereignty.
Against the backdrop of the growing cryptocurrency market, the digital euro — unlike crypto-assets — would be central bank money.
The ECB would guarantee it is safe, that it keeps a stable value, and that it can be exchanged at face value for cash.
The digital euro would offer people an additional payment option and would work like a digital wallet.
Importantly, the digital euro would be available for payments both online and offline so payments could be made even where there is no internet connection.
According to the commission, offline payments would ensure a high degree of privacy and data protection.
"They would allow users to make digital payments while disclosing less personal data than they do today when making card payments," it said.
Those who do not have a bank account would be able to open and hold an account with a post office or other public entity using the digital euro.
If the current proposal package is adopted by the European Parliament and Council, it will ultimately be for the ECB to decide if and when to issue the digital euro.