site.btaEuropean Parliament Backs Digital Euro and Protection of Cash Payments

The European Parliament (EP) has endorsed the use of digital assets, backing an innovation-friendly and secure environment for financial transactions. The EP stated that investment and technological development should remain within the European Union, supported by innovation in payments and competitive financial markets.

The European legislature welcomed the ongoing work on the digital euro, covering both retail and wholesale applications, and expressed support for the short-term Pontes project and the long-term Appia project on distributed ledger technology (DLT) for wholesale central bank payments. They also called on the European Commission and the European Central Bank to ensure that future digital euro solutions operate seamlessly with DLT infrastructure and complement, rather than replace, Europeans' use of cash, according to a European Parliament press release.

The rapporteur on the proposed regulation establishing the digital euro is Fernando Navarrete Rojas of the European People's Party (Christian Democrats), who held a press conference on the subject on Wednesday. He said that the single currency package which will be put to the vote on Thursday has one fundamental objective: to give European citizens greater freedom in how they use their own money. It strengthens two complementary options – cash and the digital euro.

Navarrete Rojas explained that the package provides the first genuine European guarantee that citizens will be able to access and use cash in their daily lives. Merchants will be required to accept cash payments in person and may not refuse cashless payments. EU member states will have to ensure that their citizens genuinely have access to and are able to use cash, including in rural and sparsely populated areas. They will also be required to work with the financial sector to address any deterioration in access to cash. Citizens must have accessible channels for lodging complaints if they are refused the option of paying in cash. Each member state will also be required to establish a resilience plan to ensure the availability of cash in the event that electronic payment systems fail.

He stressed that the package is not about choosing between cash and digital payments, but about ensuring that citizens remain free to decide how they pay, whether digitally or through traditional means.

Digital payments should never mean giving up one's privacy. And this package guarantees exactly that, he went on to say. For online transactions, the digital euro will provide a significantly higher level of privacy than existing digital payment methods. Unlike international payment schemes, the European Central Bank and the national central banks will not be able to identify the individual user involved in a transaction. Transaction data stored within the central infrastructure will be segregated, meaning the European system will not be able to link a specific payment to a particular individual. Payment service providers will have access only to the personal data strictly necessary for anti-money laundering and fraud prevention purposes.

The digital euro will also make the euro more resilient by allowing it to function without an internet connection, the MEP said. Because offline digital euro transactions will be conducted directly between users' devices, there will be no intermediaries and no records of what was purchased, when it was purchased or by whom. No one in Frankfurt, or anywhere else, will ever be able to decide what a citizen can or cannot buy with their own money, he stressed.