EU: the Commission presents the “single currency” package, its CBDC project

The European Commission unveiled the Single currency” legislative package providing in particular for the creation of a frame for the issue of a digital euroa CBDC retail. Visit decision of its program will return to the ECB.

Europe takes another step towards the creation of a central bank digital currency. The European Commission announced two proposals within the Single currency package.

The first aims to preserve the role of species (coins and banknotes) and their legal tender status. To complement this, the European executive has tabled a second legislative proposal. Its aim is to define a legal framework “for the release of a possible digital euro. “

Protecting cash and creating the framework for digital currency

This framework is intended for a retail digital currency or retail. For the Commission, this euro should constitute :

An economical, secure and reliable digital payment method, based on a form of public currency accepted everywhere, and which would complement existing private solutions.”

The legislator is therefore defining a legal framework. However, the Commission points out that it will ultimately be up to the ECB “to decide whether and when to issue a digital euro.” And possibly also to limit its holding.

With its currency package, the Commission is underlining its desire to preserve cash, which it claims is favored by 60% of those polled. Its proposal should therefore guarantee Europeans “the freedom to choose their preferred method of payment”.

The Commission justifies its move in favor of a digital currency by the initiatives taken in this field by various central banks. It therefore considers a CBDC important for the monetary sovereignty of the EU.

The CBDC, a reaction to the development of crypto

“Finally, it also has its importance against the backdrop of the development of the cryptocurrency market,” stresses the European executive. It should be remembered that it was Facebook’s Libra currency project that initially triggered the central banks’ work on the CBDC.

The ECB welcomes the European Commission’s project. As for the decision to issue, this has yet to be taken. In a press release, the central bank mentions a important autumn meeting.

The investigation phase of the digital euro project will end in October 2023. The ECB’s Governing Council will then decide whether to move on to the next phase of the project,” she says.

If this stage is reached, the ECB will continue to develop and test technical solutions and commercial agreements. “Any decision by the Governing Council to issue a digital euro will only be taken once the legislative act has been adopted,” she points out.

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