THE INTRODUCTION OF a ‘digital euro’ has been welcomed by Irish European representatives – but they say the EU must remember the continued importance of cash.
The European Central Bank (ECB) is developing plans for how a digital euro can be used, and hopes it will future-proof the currency.
Irish Commissioner for Financial Services, Financial Stability and Capital Markets Union Mairead McGuinness told The Journal that the digital euro will not replace cash, but instead “complement” it.
Fine Gael MEP Frances FitzGerald said the protection of cash was important: “You still have to be able to use cash and accept cash.”
The European Commission has taken on the task of ensuring the security of the currency – so that it cannot be misused – and build trust and confidence for the currency within the Eurozone’s population.
False claims and conspiracies have been spread about the currency, including that it will completely replace cash and will be used to track citizens who use it.
It has also been claimed that it will have a significant impact on citizens’ privacy.
The ECB plans to peg the value of both currencies – digital and physical – to each other, and to allow the exchange of digital euro for cash or vice versa at cash machines. Users will be able to acquire digital euro through their banking apps and through a dedicated digital euro app.
People without access to a bank account would be able to pay for goods and services with digital euro by using a card provided by a public body, such as a post office.
Unlike cryptocurrency, the digital currency will be regulated and distributed by the ECB.
Transactions between individuals and exchanging the digital currency to cash will not be anonymised, unlike trading cryptocurrency or paying by cash. This means payments using the digital currency will be similar to debit or credit card payments.
Sinn Féin MEP Chris MacManus said parliamentarians have been highlighting the need for cash to the ECB.
MacManus, who is a substitute member of the European Parliament’s Economic and Monetary affairs committee, said that the ECB has been made aware of these worries at committee level and has committed “in writing” that cash will remain in place.
He added that he held concerns over how business might be able to exploit the currency to carry out financial malpractices.
For this, MacManus said he wants to make sure that strong regulations are put in place to maintain the integrity of the currency.
McManus told The Journal that the introduction of the digital version of the euro was “an inevitability” and a reaction to other digital currencies, like the digital version of China’s Renminbi.
Last week, the ECB announced the digital currency was moving into its second phase of development after a two-year investigation phase on design and distribution of the money. It is expected that the currency will be fully developed and implemented in 2026.
Fitzgerald said: “It has moved into kind of a second stage of analysing the pros and cons.”
Commissioner McGuinness wrote in The Financial Times in June: “We’re safeguarding cash as an accepted form of payment. But we also want to offer people an extra choice.”
“The digital euro would be a complement to cash, not a replacement,” she wrote.
McGuinness told The Journal: ”Bringing the euro into the digital age is an important European project. I have no doubt that a digital Euro will bring advantages to citizens and businesses across the EU.”
“Ultimately, it is the ECB that will decide if and when to introduce the digital euro, and I welcome their decision last week to move from the investigative phase to the preparation phase on the digital euro,” she added.
To embed this post, copy the code below on your site
have your say