Digital euro plan: EU govts, institutions want to ensure they, not private sector, are in charge

European Commission vice president says move essential so that they do not fall behind the curve

BRUSSELS (Reuters Breakingviews) – European Commission Vice President Valdis Dombrovskis has made financial stability the centrepiece of a new push to convince member states and the European Parliament to endorse a digital version of the 20-nation common currency.

A digital euro, he argues, is essential so that the EU does not fall “behind the curve” in global payments, private-label digital currencies and electronic versions of central bank money.

Under the proposal, the European Central Bank would have control over who can use the digital euro, how it will be used internationally, and how much people can hold at one time. At the same time, the plan calls for a digital European currency to have an international role, part of efforts to shore up the euro as a global reserve currency.

Politicians want consumer privacy and continued access to physical cash to be protected as the process moves forward, while the banking sector wants to make sure it will not bear a disproportionate burden in transaction costs and shifting consumer patterns.

Europe’s steady march forward contrasts with the wait-and-see approach of the US Federal Reserve and the focus on financial innovation in preparatory work at the Bank of England. The EU plan calls for the digital euro to be accepted as legal tender almost everywhere, at no cost to ordinary consumers. Instead, expenses would be borne through fees just as electronic card payments are now.

The ECB, meanwhile, has been working with companies like Amazon.com and Worldline to develop applications and is on course to decide in October on next steps. If there is going to be a digital euro, Europe’s governments and institutions are clear that they, not the private sector, will be in charge.