BRUSSELS: The EU is advancing towards a digital euro to lessen its reliance on US payment systems like Visa, Mastercard, Apple Pay, and Google Pay. This digital currency aims to offer a local alternative for transactions in stores and online.
EU lawmakers are set to vote on this initiative, following the European Central Bank's (ECB) suggestion for a digital euro in 2020. For the project to progress, the EU Parliament and member states must approve the framework.
Digital euros will exist in a virtual wallet, separate from traditional bank accounts. If approved, it could be available to citizens by 2029, with pilot programs launching as early as mid-2027.
Payment methods will retain the same value as cash, allowing transactions in stores and online while protecting user privacy and offering an offline mode for confidential payments. The ECB emphasizes that cash will remain available alongside existing payment methods.
The EU aims to establish a sovereign payment solution, highlighting the need to decrease dependency on US systems, as nearly two-thirds of card payments in the euro area involve non-European companies. Critics within the banking sector cite financial stability concerns and adaptation costs for banks, which are estimated to be about 18 billion euros. However, the ECB assures that the design of the digital euro will mitigate risks to financial stability.
Ultimately, the digital euro is seen as an essential step in reclaiming monetary sovereignty and adapting to a highly digitized payment landscape.