The Eurosystem, of which the Banco de España is a member, is looking into the possible issuance of a central bank digital currency (CBDC), the digital euro. It would be the digital version of our currency, and it would complement banknotes and coins, giving people an additional choice for making payments across the euro area. Cash would still be a payment option; it would not be replaced. The project is advancing in the preparations for a potential issuance; however, no decision has yet been taken on whether it will be issued.
What would it be?
A digital euro would be money issued by the central banks of the Eurosystem: in other words, it would be like cash but in a digital format. It would provide an additional electronic means of payment, complementing cash and private means of payment. Furthermore, it would be a digital means of payment universally accepted throughout the euro area, at no cost for citizens for basic services (e.g opening an account, paying at a shop), and backed by the Eurosystem. Its design takes inclusion aspects into account to ensure the needs of all citizens are considered, guaranteeing universal access. Work on specific financial inclusion measures is underway.
Motivations
In the context of increasing electronic and mobile payments, it is essential to preserve the role that central bank money plays in guaranteeing citizens’ confidence in our currency. Therefore, cash needs to evolve to meet changes in users’ payment preferences and thus provide a public, accessible and secure means of payment. The digital euro would strengthen the resilience of retail payments in Europe and help reduce our dependence on non- European providers. Furthermore, it would serve as a catalyst for innovation and competition in the European payments sector by offering a set of technical standards to be used in a harmonised way throughout the euro area. The digital euro would also facilitate the provision of value-added services by relying on a common infrastructure/ framework.
Benefits
A digital euro would bring benefits both for citizens and merchants, as well as for the European economy. Some key benefits include:
- The digital euro would complement banknotes and coins, reaching payment segments where it is currently not possible to use cash, e.g. e-commerce.
- As a public good, it would preserve the most relevant characteristics of cash. In particular:
- Respect for user’s privacy in the digital era: the Eurosystem would not identify or track user’s payments.
- Easy to use, even for people not used to or with difficulties in handling digital devices.
- Secure and accepted throughout the euro area.
- Basic use free for consumers.
- It would foster innovation and the digitalization of the European economy.
- It would guarantee the continuity of payments, by offering an alternative payment solution that would be accessible for all, even in case of technical disruptions, such as outages.
- It would be a payment solution governed by Europe, guaranteeing our autonomy amid potential geopolitical tensions.
- It would contribute to prevent market dominance, improve the efficiency of payment systems and promote innovation in the private sector.
- It would offer the possibility of making payments without Internet connection and with a level of privacy similar to cash, that is, with offline payment, the details of the transaction would only be known by payer and payee.
