European Union Considering Digital Euro Legislation
According to Mairead McGuinness, EU Commissioner for Financial Stability, Financial Services, and the Capital Markets Union, the bill outlining the framework under which a digital euro would operate will not be issued until late 2023.
The European Central Bank will utilize the Act as the legal underpinning for launching a central bank digital currency.
Early next year, the legislative plan will include full EU-wide coverage of instant payments via Sepa Instant credit transfer, with the goal of addressing the fragmented market for cross-border real-time payments.
It also aims to encourage open banking projects throughout the European Union. EU finance director Mairead McGuinness highlighted the Commission's legislative ambitions at a fintech conference on Wednesday morning, despite the lack of specifics.
‘Our intention is to table legislation in early 2023,’ McGuinness stated during the unveiling. In the following weeks, there will be a targeted legislative consultation.
The ECB is already testing the digital euro internally and hopes to have a prototype ready by the end of 2023. Because of the growing popularity of cryptocurrencies and pressure from IT companies inventing new payment methods using digital assets, policymakers have begun to conduct these experiments.
In mid-November, ECB Executive Board member Fabio Panetta told Members of the European Parliament:
“If we don’t satisfy this demand, then others will do it. As co-legislators you will play a key role in any changes to the EU legislative framework that may be necessary to introduce a digital euro.”
Although policymakers in the Commission and across Europe have expressed support for a CBDC. The ECB's Governing Council will have the final say on whether a digital euro is required.