Heard of the digital euro?

14/12/2023

The way we pay and receive money is changing. Cash usage is waning, while online shopping and digital payments are the order of the day.

Against this backdrop, the digital euro project is making progress. While there is still a long road ahead, the ECB Governing Council has now decided to enter the preparation phase after two years of investigation.

This is certainly an important step but does not mean a decision to launch the digital euro has been made.

Based on the agreements so far, the digital euro would be:

• An electronic means of payment. It would not replace cash. You would use the digital euro alongside banknotes and coins.
• Something that does not currently exist: a digital means of payment universally accepted throughout the euro area, for payments in shops, online or from person to person (online or otherwise), irrespective of the euro area country you are in or the bank you use.
• Another way to pay using the euro, in response to people’s and firms’ growing preference to pay digitally. It would not be an alternative currency within the Eurosystem.
• A public good, and therefore free for basic use.
• Different from stablecoins and crypto-assets. As central bank money, it would be backed by the ECB. Central banks have a mandate to maintain the value of money, whether it be in physical or digital form. Conversely, the stability and reliability of stablecoins depend on the entity that issues them and the credibility and enforceability of their pledge to maintain the money’s value over time.