EU Wants Digital Euro to Complement Cash, Not Replace It

The European Commission (EC) says a digital euro should complement cash, not replace it.

The EC on Wednesday (June 28) published a pair of proposals designed to make sure consumers and businesses can continue to use hard currency, while also creating the framework for a digital version of the euro.

“Bringing the euro into the digital age is an important European project,” said Mairead McGuinness, the EC’s Commissioner for Financial Services, Financial Stability and Capital Markets Union.

“By complementing cash,” she added, “I have no doubt that a digital euro will bring advantages to citizens and businesses across the EU. But I am aware that it requires peoples’ trust and confidence. Today’s proposal will help frame the debate around what a digital euro is and the advantages of creating it.”

The commission notes that its surveys have found that 60% of Europeans want to have the option to pay with cash, though an increased number now pay digitally with cards and other electronic methods, a trend heightened during the COVID pandemic.

In reflection of these trends, the EC has proposed a measure designed to safeguard the use of cash, and another to ensure that people also have the option to pay digitally.

“While today’s proposal — once adopted by the European Parliament and Council — would establish the legal framework for the digital euro, it will ultimately be for the European Central Bank to decide if and when to issue the digital euro,” the commission said.

The European Central Bank (ECB) earlier this year restated its commitment to upholding cash payments in Europe, saying cash is still the most widely used payment method for everyday transactions. The ECB also found that cash accounted for 59% of payments at the point of sale and remained the preferred payment means for 22% of citizens.

The ECB is expected to decide in October whether to move ahead with a retail digital euro.

Earlier this year, ECB President Christine Lagarde said that this digital currency could offer Europeans more resiliency and autonomy, as many citizens now rely on payment apps and cards that are not European.

Meanwhile, Europe’s shift toward digital payments is happening as the number of Americans who carry cash continues to decline.

As PYMNTS wrote earlier this month, 84% of consumers reported using cash in 2020, a number that fell to 81% as recently as April. And even among consumers who continue to do cash, 33% say they use it less than they used to.