Mairead McGuinness, European Commissioner for Financial Stability, Financial Services, and Capital Markets Union, believes that steps toward a digital euro should be taken slowly and cautiously after the European Parliament elections in June 2024. She suggests that the European Central Bank’s (ECB) central bank digital currency (CBDC) project should be approached “quietly and slowly” by the next European Committee, which will be approved by the parliament to be elected.
The digital euro is considered a significant step by the ECB. Although the fate of this project will be decided in October, as emphasized by Mairead McGuinness, several crucial questions need to be answered before this decision.
McGuinness points out that the use of cash is gradually decreasing, with many people nowadays making their purchases using cards or digital payment methods. Digital payments are replacing physical cash. However, how much do we really need a central bank-controlled digital currency? This question raises the necessity of developing the digital euro project.
Advantages of Digital Euro
The digital euro could have several advantages. Firstly, it could provide a fast and secure payment method. Additionally, financial transactions could become more transparent with this digital currency. Ensuring the protection of personal data and privacy will also be a crucial concern.
In June, the European Commission proposed a legal framework for the digital euro. This plan aims to offer essential digital euro services for free, protect privacy, and enable offline payments. However, it is still unclear how these changes will impact the financial sector.
The Role of the European Central Bank (ECB)
ECB Executive Board member Fabio Panetta has openly expressed his support for the European CBDC as a “new paradigm to safeguard monetary sovereignty.” The ECB plans to complete the research phase of the digital euro project in October 2023. Afterward, it will continue with advanced development and technical solution testing.
The 2024 European Parliament elections are planned to take place from June 6 to June 9, 2024. According to EU procedures, the newly elected parliament will then approve or reject the proposed Chairman and other members of the European Committee by the European Council. This critical decision could significantly influence the future of the digital euro.