The European Parliament’s Economic and Monetary Affairs Committee on Tuesday authorized the long-awaited digital euro, as the EU strives to reduce its reliance on US-controlled payment systems.
According to data from the European Central Bank, US payment giants Visa and Mastercard account for 61% of card payments in the euro region and practically all cross-border card transactions. The discussion regarding Europe’s financial sovereignty has been heating up as geopolitical tensions rise and worries grow about the bloc’s reliance on foreign payment infrastructure.
The digital euro is one of the tools proposed to reinforce Europe’s strategic sovereignty. It would be a digital form of central bank money, produced and supported by the ECB, to complement cash and existing banking services rather than to replace them.
The system will facilitate online and offline payments and will deliver a high level of anonymity, as the ECB will not be able to identify consumers directly from their payment data. The ECB would provide the underlying infrastructure and commercial banks and payment service providers would deliver digital euro services to clients. Financial institutions would be paid for their involvement in the plan, while businesses will pay costs that are projected to be lower than existing card transaction prices.
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