European Commission Plans to Introduce Digital Euro

The European Commission is looking to introduce a digital euro to make transactions easier for Europeans. The European Central Bank (ECB) would guarantee its value, making it a stable alternative to the wild west of crypto coins. However, the Dutch Banking Association (NVB) is asking for more clarity on the role of banks in this new system.
In a press release, the NVB is specifically asking for clarity regarding “the costs for citizens and companies, the impact of the digital euro on the privacy of users and the consequences for financial stability.”

EU Plans Converted into Bill

The EU plans have been converted into an actual bill since last week, but there are still many political hurdles to overcome. It is clear, however, that it concerns an electronic way of paying with money that does not come from a private bank. So there is no intermediary that now applies to bank accounts. Similarly, a conventional bank is ultimately not about actual digital money, but a virtual representation of cash that, in theory, can always be called up. The plan had been in the research phase since October 2021.
The NVB sees the introduction of the digital euro as a fundamental change in the current monetary system. In the near future, it will be necessary to properly map out the consequences of the design of the currency for the costs that participants in the payment system will have to incur, and also for financial stability.

Scale Limited

At the beginning of this year it was already known that the ECB does not want to grant permission to use the new currency for energy bills or rent, for example. So it only concerns simple, one-off payments. In this way, it hoped to allay some fears among banks. That does not seem to have been fully successful so far.
Research from Brussels showed that citizens are mainly concerned about the privacy of the new currency (43 percent), while also security (18 percent), usability (11 percent), extra costs (9 percent) and offline use (8 percent).
The digital euro is set to become available for free, but with limited use. The ECB is hoping to allay some fears among banks, but it remains to be seen if the digital euro will be successful. The NVB is asking for more clarity on the role of banks in this new system, as well as the costs, privacy, and consequences for financial stability.
It is clear that the introduction of the digital euro is a fundamental change in the current monetary system. It is important to properly map out the consequences of the design of the currency for the costs that participants in the payment system will have to incur, and also for financial stability.
The digital euro is set to become available for free, but with limited use. It is important to consider the privacy, security, usability, extra costs, and offline use of the new currency. The ECB is hoping to allay some fears among banks, but it remains to be seen if the digital euro will be successful.