The European Parliament on Thursday voted in favor of renewed negotiations to create a digital version of the euro, with 416 votes in favor, 169 against, and 22 abstentions. Lawmakers are scheduled to meet with member states later this month to discuss the concept, aiming for a deal by the end of 2026. The European Central Bank could make the digital euro available by 2029.

The digital euro is touted as the EU's best chance to break its dependence on US payment systems such as Visa, Mastercard, Apple Pay, and Google Pay. According to the ECB, nearly two-thirds of card payments in the eurozone are handled by non-European companies, mainly Visa and Mastercard. Additionally, 13 out of 21 eurozone countries lack a national card scheme for everyday payments.

The digital euro would have the same value as cash and banknotes. Users would need to open an account with a bank or a public entity like a post office and deposit funds. Payments could be made in stores, online, and between individuals using cards, apps, or phones. EU officials claim the digital euro would protect privacy by safeguarding user identity, and an offline mode would offer cash-like confidentiality.

EU lawmaker Fernando Navarrete Rojas dismissed rumors that the digital euro could be used as a tool of control, insisting it would employ the highest privacy standards. However, experts warn that a key challenge is ensuring the digital euro does not function like a full bank account, as this could lead to deposit outflows from European banks during crises, such as bank runs.

Alessandro Giovannini, advisor to the digital euro director at the ECB, said the digital euro would provide more choice and allow consumers to preserve their freedom to choose how to pay as daily life becomes more digital. He emphasized that it would not replace cash or existing private payment methods. EU officials also highlighted the digital euro's potential utility in difficult situations, such as when International Criminal Court judge Nicolas Guillou lost access to payment methods after US sanctions. Giovannini called the digital euro a chance to end a dependence the EU has lived with for too long.

Source: www.dw.com