European Parliament: compromise on digital euro

The plans for the digital euro are gaining ground in the European Parliament. After intensive negotiations in the Committee on Economic and Monetary Affairs (ECON), MEPs' negotiators agreed on a common position on Thursday, with compromises on highly technical issues.

It is now clear: the responsible MEPs are aiming for an independent and resilient public infrastructure. The biggest obstacle in the negotiations was probably whether the new payment instrument should work exclusively online or also independently of an active internet connection. The solution now agreed, according to Volt MEP Damian Boeselager, who participated in the talks as ECON vice-chair, envisages a comprehensive system. Users should not have to switch between different apps, but should be able to pay seamlessly online and offline.

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To reduce the risk of money laundering and financial fraud, offline mode will initially be limited to transactions in close proximity – i.e., from smartphone to smartphone or directly at the cash register, for example via NFC (Near Field Communication). Remote payments in offline mode are not excluded. However, they should only be considered after a risk assessment by the new European Anti-Money Laundering Authority.

Another crucial point concerned the fears of small and medium-sized businesses about unforeseeable and excessive transaction fees. Here, the negotiating team agreed on a temporary fee model that will aim to significantly reduce costs for merchants through a cap. This means that large retail chains will not pay more than they currently pay. Smaller businesses are also expected to benefit from significantly lower fees in some cases.

All offline transactions will also be processed for free, while Boeselager and the Green team initially pushed for a flat fee of four cents.

Unified system and strong data protection

MEPs are paying particular attention to ensuring that the new payment system is implemented uniformly from day one. They rejected the separation into different sub-projects or the linking of core functions to conditions. In addition, MEPs want to gain citizens’ trust. This is how they amended the data protection requirements. Through strict adherence to the General Data Protection Regulation ( GDPR ) and the concept of Privacy by Design , Europeans will no longer have to choose between modern digital payments and their fundamental right to privacy in the future.

French and German data protection authorities recently demanded that the digital euro technically mimic the anonymity of coins and banknotes. They also argued that privacy should be directly anchored in the technical architecture. They rely mainly on offline operation, as in this case no payment history with central institutions would be created. The digital tokens would be stored locally on a smartphone or card and could be transferred from device to device without a network connection.

Cash remains protected

Despite the digital transformation, cash will not be abolished according to the plan. The digital euro is intended to be a complement. Technologically, the digital currency should be directly linked to the EUDI Wallet to make handling as simple and secure as possible.

From Boeselager's perspective, the digital currency should strengthen the continent's monetary sovereignty and create a real alternative to non-European payment service providers that dominate the market, such as Visa and Mastercard. The MEP is largely satisfied with the package achieved, even if his group would have liked more ambitious results in some areas.

The vote in ECON is scheduled for June 23. The proposal will then be debated in plenary in Strasbourg before the parliament's summer recess.

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