The European Commission (EC) is planning to submit legislation that will lay down the legal foundation for a digital euro currency, Politico reported this week. A new law will assist the European Central Bank (ECB) in working out the technical side of the project, which began its investigation phase in October 2021.
Before the draft law is introduced early next year, the executive body in Brussels hopes to launch a public consultation. The ECB already consulted in 2020 when it found that Europeans were deeply concerned about financial privacy.
Regarding everyday payments, the European Commission intends to focus on practical questions. Earlier than the end of 2022, we aim to introduce legislation. A targeted legislative consultation will be held in the coming weeks.
It will be up to the European Commission to coordinate the bill with the governments and legislatures of each member state before it becomes law. A prototype of the CBDC is expected to be ready by the end of 2023. ECB is currently testing the digital euro.
Interested governors in the Eurozone will need to decide by 2025 whether it’s worth minting a virtual currency and whether it can destabilize the financial system. An impact assessment will be conducted and part of the finalizing of the project to determine whether the digital euro cannot destabilize the financial system.
However, leading EU members like France and Germany have urged the Eurosystem’s central bank to step up its efforts in that direction even before the ECB’s Governing Council makes the final decision.
There is concern among policymakers in Brussels and European capitals that the Eurozone will fall behind nations such as China, the U.S., and Russia that have developed their own digital currencies.