According to CoinDesk, the European Commission unveiled a legislative plan to support a digital euro on Wednesday, saying it would ensure that Europeans can make digital payments for free across the euro zone. A version of the text two weeks ago included privacy and financial stability protections, but many stakeholders are already questioning the benefits that a potential new central bank digital currency (CBDC) could bring. In response, European Commission Executive Vice President Valdis Dombrovskis said in an article published on the European Commission website on Wednesday that CBDC brings "strategic advantages."
The law does not make a digital euro a reality, as it would be up to the European Central Bank to decide whether to issue a CBDC. Officials believe the state-backed digital currency offers features not always available with private payment methods - allowing payments between friends and having higher data protection standards.
Yet despite years of technical work by the central bank, many remain confused, including some lawmakers and governments who need to approve the committee's new bill. The move has also been met with skepticism by commercial banks, for whom the state-backed currency represents competition for their own digital payment systems and a possible alternative to savings accounts.
New legal proposals aim to ensure a digital euro can be used offline, offering a level of privacy comparable to cash. It prohibits “programming” the CBDC to limit the goods it can be used to purchase, although officials say it could still be used to support conditional payments, such as monthly utility bills, or more complex smart contracts.
