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European Commission opens new consultation on digital euro

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The European Commission is asking financial services specialists to consider the possible introduction of a digital euro.

In a note on Tuesday, the European Commission’s Directorate-General for Financial Stability, Financial Services and Capital Markets Union announced that it would prepare an assessment of the central bank’s digital currency based on the expected impact on financial service providers, retail users and chambers of commerce. The Commission will consult with industry specialists on digital euro issues, including international payments, data protection, the impact on the financial sector and financial stability, use cases alongside cash payments, and anti-money laundering and anti-terrorist financing rules.

“In order for a digital euro to be used as a single currency at the same time as euro banknotes and coins, a co-legislator’s regulation on a proposal from the Commission is required,” the consultation document states. “Furthermore, additional legislative adjustments to the current EU regulatory framework may be required to adapt to the digital euro and potentially to digital currencies issued by central banks of non-euro area member states.”

The consultations on the digital euro will complement those carried out by the European Central Bank, which recently published the results of focus groups commissioned in September 2021. Feedback from the public and retailers suggested that the potential adoption of a digital euro could benefit from use cases both online and in physical retail stores. The European Commission accepts replies by June 14th.

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Mairead McGuinness, the European Commission’s finance chief, said in February that a bill for a digital euro would be proposed sometime in 2023. The European Central Bank has been investigating the development of a digital euro as interest in central bank digital currencies appears to be growing around the world. A consultation by the ECB from October 2020 to January 2021 found that a digital euro could help lower interest rates, speed up transaction processes and reduce the use of cash.