Single currency: Council agrees position on the digital euro and on strengthening the role of cash 15:18 The Council today agreed on its negotiating position on key proposals[...]

The Council today agreed its negotiating position on key proposals to strengthen the euro currency by enabling the introduction of a digital euro and by better clarifying the legal tender status of euro cash. In turn, these initiatives will help improve the EU's strategic autonomy, economic security and resilience.

The proposals relate to two regulations setting out the legal framework for the potential issuance of a digital euro, and a regulation to safeguard the role of cash in the EU by ensuring its wide acceptance and availability.

Digital euro

The digital euro would complement cash and would be available to the general public and businesses to make payments anytime and anywhere in the euro area. As a truly public facility directly backed by the European Central Bank (ECB), it would help preserve central bank money as the main anchor for a well-functioning payments system.

Under the proposal, the digital euro would:

• be available online or offline and therefore usable even without an internet connection
• allow for payments and money transfers with a high degree of privacy
• exist alongside national and international private means of payment, such as cards or applications run by privately-owned providers

Once the proposal to establish the legal framework is adopted by the European Parliament and Council, it will ultimately be for the ECB to decide whether to issue the digital euro. The ECB has recently indicated that the digital euro could be up and running by 2029.

In its position agreed today, the Council has clarified a number of important elements regarding the design of the digital euro.

To avoid the digital euro being used as a store of value and any impact on financial stability, the text provides for limits on the total amount of digital euros that can be held on online digital accounts and in digital wallets at any one time. The limits will be set by the ECB, but must respect an overall ceiling agreed by the Council which will be reviewed at least every two years.

Payment service providers may not charge consumers for certain mandatory services, such as opening and closing accounts, carrying out digital euro payment transactions from their account or wallet, or funding and defunding their digital euro accounts or wallets with money from their other deposit accounts in the same payment service provider. However, certain added-value services may be subject to fees.

The text also lays out a framework to ensure that providers of digital euro interfaces and services receive the necessary access to mobile device producers' hardware and software to ensure that fair access can be granted.

Additionally, the text lays out the framework for how PSPs shall be compensated. During a transitional period of at least five years, interchange and merchant service charges will be capped at a level based on fees for comparable means of payments. After the transitional period, fee caps will be set based on the actual costs associated with the digital euro.

Strengthening the legal tender status of euro cash

Under current EU law, euro cash is the only legal tender in the euro area. This means that physical euro cash must generally be available and accepted to pay for services and goods and to discharge debts, subject to well-framed and monitored exceptions.

The proposal on which the Council has now reached its position aims to clarify these rules, including their interplay with the digital euro, to ensure consistency among the two forms of public money. The proposal's main provisions aim to:

• safeguard acceptance of cash as a payment method throughout the euro area
• guarantee that people have access to cash and are free to choose their preferred payment method

In its position, the Council indicates its wish to effectively ban non-acceptance of cash by retailers or service providers with a few exceptions, notably for payments for goods or services purchased at a distance, including online, and unmanned points of sale. Businesses may however still indicate a preference for card or digital forms of payment.

The Council's negotiating mandate requires EU member states to monitor the acceptance of cash and to ensure access to cash throughout their territory on the basis of common and national indicators and take remedial measures where necessary.

Finally, member states are expected to establish a cash resilience plan or measures for situations of widespread and severe disruptions of the continuity of electronic means of payments.

Next steps

With this agreed position, the Council can enter into negotiations with the European Parliament on the digital euro and the legal tender status of cash.

• Council negotiation mandate on the establishment of the digital euro
• Council negotiation mandate on the provision of digital euro services by non-Euro area payment service providers
• Council negotiation mandate on legal tender of euro banknotes and coins
• Towards a digital euro (background information)
• The euro (background information)