Thirteen of the 21 eurozone countries rely entirely on international cards, according to the European Central Bank. The digital euro aims to provide an alternative, although its holding limits and technical design are still pending.
According to El Periódico, European institutions are promoting the digital euro to reduce Europe's dependence on other countries for payments, primarily the United States. According to the European Central Bank (ECB), 13 of the 21 eurozone countries rely entirely on international card schemes, such as Visa and Mastercard, which process 61% of payments.
The chair of the Economic and Monetary Affairs Committee of the European Parliament, Aurore Lalucq, is one of the main advocates of the project in Brussels. Lalucq cited the case of an International Criminal Court judge whose bank accounts had been frozen, warning that he could not make payments or conduct banking operations.
“He cannot buy anything online, rent a hotel room, or access streaming platforms.”
Jesús Castillo, director of Digital Finance and Payments at CECA, links the push for the project to this dependence and the rise of digital payments and the decline of cash. Castillo points out that the decreasing use of cash and the rise of e-commerce have opened the door to new solutions.
Technically, the digital euro is a CBDC, which stands for Central Bank Digital Currency. The ECB wants it to be the digital equivalent of cash and an additional alternative to current payment methods. It will allow payments between individuals, in physical stores, and in digital environments, both online and offline.
In Spain, where Bizum is widely used, the digital euro could complement existing solutions. In other countries without similar methods, Castillo believes it would add more value.
The project is still in the design phase. European institutions are working on the regulation and a rulebook that will set the common framework for use and design. Pending aspects include holding limits, technical architecture, economic model, and operational functioning.
Castillo indicates that details will be defined in the coming months and years. According to him, payments can be made online and offline through payment service providers, mobile devices, and digital banking.
One of the most relevant points will be the amount of money each user can hold in their wallet. The digital euro is not conceived as a savings instrument but as a means of payment, so it will have holding limits common to the entire EU, yet to be determined.
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