EU finance ministers reach consensus on digital euro roadmap, seeking to decrease Visa and Mastercard usage as long issuance process is planned.
European finance ministers have agreed on a roadmap to launch a digital euro. The digital currency will seek to compete with payment systems in the United States, such as Visa and Mastercard, which are based in the U.S.
The digital euro is an electronic wallet that is proposed in the project supported by the European Central Bank (ECB). It is hoping to offer a European substitute to U.S. credit cards and stablecoins.
Digital Euro: Another European Sovereignty step in finances.
The finance ministers of the EU were gathered in Copenhagen with the European Central Bank president, Christine Lagarde, and the European Commission Valdis Dombrovskis.
They laid down definite follow-ups to the issue of the digital euro, such as a hold limit on the issue in a bid to evade bank runs.
A compromise was affirmed by the chair of the meetings of the finance ministers, Paschal Donohue. The Council of Ministers will deliberate on the proposed limits and approve them before the ECB makes a final decision to issue the limits. This will be done to earn the trust and stability of the banks.
The ECB will provide information on holding limits that will be approved by the Council. This procedural innovation is an advancement following legislative inertia.
In June 2023, the European Commission suggested legislation for a digital euro. It is, however, still unfinished by the European Parliament and the Council.
Long Way to Go Before Digital Euro.
The Council is hoping that it will complete its work by the end of the year. The ECB aims for the legislation to be passed by June next year.
Subsequent preparation of the actual launch will then require a period of two and a half to three years.
Nowadays, there are nationalities with digital payment systems in a number of countries in the EU. However, none of them are cross-border or as detailed as the digital euro plans.
Lagarde focused on the political weight of the currency. She said that the digital euro is an affirmation of the financial sovereignty of Europe. It seeks to create a pan-EU payment system that is not reliant on the U.S. systems.
The shift to a digital euro was necessitated by fears of reliance on international financial systems. The EU is interested in strengthening its financial and other strategic capabilities, such as energy and defense.
The online euro will be made to be considerate of the privacy, cost, and banking industry issues. Hitherto, legislators have been reluctant due to potential threats to the deposits of banks and their operating costs.
This scheme is indicative of a fundamental change in European monetary policy. It reinvents the way the continent wishes to handle money and payments, as well as sovereignty in the digital age.
