Digital euro – the draft law paves the way for the future of payments in Europe

The European Commission has published a draft law on the introduction of a digital euro. The aim of this initiative is to meet the increasing demand for digital payments and the use of private digital payment methods.

The digital euro is understood as digital cash, a central bank digital currency for retail payments, which is to be issued by the ECB. Consumers should be able to use the digital euro for payments in retail and e-commerce.

Intermediaries play an important role in enabling users to access the digital euro. Acceptance points such as merchants, businesses and public authorities are to accept the digital euro in the euro area so that it can be used as a European means of payment.

Intermediaries are defined in the draft law as payment service providers and other companies that provide services related to the issuance, distribution, exchange and custody of the digital euro. This mainly concerns payment service providers, banks and financial institutions.

For intermediaries, the following implications and measures arise in connection with the digital euro:

  1. Improved payment infrastructure: the introduction of the digital euro promotes the development of digital means of payment. Intermediaries need to adapt their systems and processes to enable transactions with the digital euro. The integration of digital wallets into their services and the development of necessary interfaces are crucial here.
  2. Value-added services: the digital euro meets customers' expectations for a seamless and convenient digital payment experience. Financial institutions and businesses should offer user-friendly digital payment solutions, integrate the digital euro into their services and use innovative technologies such as mobile payments and digital wallets. Intermediaries should inform customers about the digital euro and support them in its use.
  3. Partnerships and collaborations: financial institutions and corporations can collaborate with FinTech companies, technology providers and payment service providers to leverage expertise and drive innovation in the digital euro ecosystem. Close cooperation with central banks and the ECB is also important to ensure coordinated implementation.
  4. Cost reduction and improved transparency: using the digital euro can reduce transaction costs for financial institutions and companies, especially for cross-border payments. The exact fee structure has yet to be determined. The digital euro also simplifies cross-border payments within the euro area and offers increased transparency.

When introducing the digital euro, intermediaries must observe relevant regulations and data protection requirements. Security and data protection measures must be reviewed and adapted to ensure the integrity and confidentiality of transactions.

An active role in the public discussion is important to add the perspectives and concerns of intermediaries.

The digital euro proposal offers an exciting opportunity for innovation and growth in the financial industry. By taking these action points into account, it can be ensured that the advantages of the digital euro are utilised and customers are supported in the best possible way.

We should use this opportunity – not only as payments industry players, but especially as future users – to actively participate in shaping the digital euro and to help shape the future of payments in Europe.

The draft law still has to be adopted by the European Parliament and the Council before the law can be passed and enter into force. The final decision on whether to introduce the digital euro lies with the ECB and is expected to be made at the end of the year.

From our point of view, the question is not whether the introduction will come, but when and within what framework that will be.

Source: Proposal on the introduction of a digital euro.

Author: Anja Kamping


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