The European Council has published a 157-page paper outlining its negotiating position for digital euro legislation. As the body representing EU member state governments, the Council must approve any legislation passed by the European Parliament. The European Central Bank targets 2029 for launch, though legislative passage is no longer a foregone conclusion. In November, Rapporteur Fernando Navarrete presented a proposal suggesting that only an offline digital euro should be pursued, giving the private sector room to expand existing European retail payment solutions such as WERO. The offline approach would also help to address privacy concerns, one of the key objections to the CBDC.
This offline only path has been rejected by the European Council, which is insisting on both an offline and online digital euro. While the European Council announcement also highlighted holding limits for the CBDC and compensation for payment providers, the document showed hints of early feature creep.
In its first iteration, the digital euro is primarily intended to support P2P payments and retail payments. The European Central Bank argues that this is needed to address the dependence on Visa and Mastercard, whereas the European Council envisions a broader role for the digital euro in general payments.
It mentions the ability to “fulfil future payments needs, and in particular machine to machine payment in the context of Industry 4.0 and payments in the decentralised internet (web3).” Additionally, it asserts that the solution should be “designed from the outset” to support business to business conditional payments. This functionality overlaps with private sector initiatives, including Germany’s Commercial Bank Money Token project, which could launch within a year, subject to regulatory approval.
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