Digital Euro: Council agrees position to negotiate with Parliament

Brussels – The EU Council today agreed its negotiating position on key proposals to strengthen the single currency, enabling the introduction of a digital euro and clarifying the legal tender status of euro cash.  The permanent representatives of the 27, meeting today in their committee, COREPER, believe that these initiatives will, in turn, contribute to improving the EU’s strategic autonomy, economic security, and resilience. 

The proposals concern two regulations: one setting out the legal framework for the potential issuance of a digital euro, and the other safeguarding the role of cash in the EU by ensuring its wide acceptance and availability. 

“The digital euro is an important step towards a more robust and competitive European payment system and can contribute to Europe’s strategic autonomy and economic security, as well as to the strengthening of the international role of the euro,” argues Stephanie Lose, Danish Minister for Economic Affairs, who holds the rotating Council presidency.

Digital Euro

The digital euro would supplement cash and be available to the public and businesses to make payments anytime, anywhere in the euro area. As a purely public instrument directly supported by the European Central Bank (ECB), it would help to preserve the central bank’s currency as the main anchor of stability for a well-functioning payments system. 

According to the proposal, the digital euro:

• would be available online or offline and thus usable even without an Internet connection 
• would allow payments and money transfers with a high degree of privacy 
• would coexist with domestic and international private payment means, such as cards or applications operated by private providers.

Once the proposal to establish the legal framework is adopted by the European Parliament and the Council, it will be up to the ECB to decide whether to issue the digital euro. The ECB recently indicated that the digital euro could be operational by 2029. 

A note explained that, in the position agreed today, the Council clarified several important elements related to the design of the digital euro. 

To prevent the digital euro from being used as a store of value and impacting financial stability, the text provides for limits on the total amount of digital euros that can be held at any time in online digital accounts and digital wallets. The limits will be set by the ECB but will have to respect an overall ceiling agreed by the Council, which will be reviewed at least every two years. 

Payment service providers may not charge consumers for certain mandatory services, such as opening and closing accounts, executing digital euro payment transactions from one’s own account or wallet, or funding and emptying one’s digital euro accounts or wallet with money from other deposit accounts with the same payment service provider. However, some value-added services may be subject to fees.

The text also sets out a framework to ensure that providers of digital euro interfaces and services have the necessary access to the hardware and software of mobile device manufacturers, thereby ensuring fair access.

Furthermore, the text defines the framework for the remuneration of payment service providers. During a transitional period of at least 5 years, interchange fees and commissions for commercial services will be limited to levels based on the fees charged for comparable means of payment. After the transitional period, fee caps will be set according to the actual costs associated with the digital euro.

Reinforcing the legal tender status of euro cash

Under current EU law, euro cash is the only legal tender in the euro area. This means that physical euro cash must be generally available and accepted to pay for goods and services and to settle debts, subject to well-defined and monitored exceptions. 

The proposal on which the Council has now reached a position aims to clarify these rules, including their interaction with the digital euro, in order to ensure consistency between the two forms of public money. The main provisions of the proposal aim to:

• safeguard the acceptance of cash as a payment method throughout the euro area 
• ensure that citizens have access to cash and are free to choose their preferred payment method.

In its position, the Council expresses the wish to effectively prohibit retailers or service providers from rejecting cash, with some exceptions, in particular for payments for goods or services purchased at a distance, including online, and in unmanned outlets. Businesses may, however, continue to indicate a preference for payments by card or in digital form. 

The Council’s negotiating mandate requires the EU Member States to monitor cash acceptance, ensure access to cash throughout their territory, and take corrective measures where necessary, based on common and national indicators. 

Finally, Member States are required to establish a cash resilience plan or measures to address serious and widespread disruptions to the continuity of electronic means of payment. 

With this agreed position, the Council can start negotiations with the European Parliament.