The European Commission, the European Union’s executive branch, today released a legislative proposal that could potentially pave the way to a digital version of the euro.

Officials also detailed a second proposal that seeks to ensure cash will continue to be widely accepted in the bloc.

“The digital euro will further strengthen the international role of the euro and provide consumers and businesses with a further, universal, digital payment solution,” said Thierry Breton, the EU’s commissioner for the internal market. “It will trigger new opportunities in terms of faster, safer and more innovative payments, all while ensuring the highest level of privacy for its users.”

The draft legislation aims to set out the “legal framework and essential elements of the digital euro,” officials detailed. If the proposal is adopted, the task of deciding if and when to create a digital euro would be relegated to the European Central Bank. Officials noted today that the initiative will require “significant further technical work” on the central bank’s part.

Under the proposal, a potential digital version of the euro would support both online purchases and offline transactions at locations such as retail stores. Offline transactions would be carried out on a “device-to-device” basis. Moreover, the proposal specifies that users should have the ability to carry out such device-to-device payments even if there’s no internet connection. 

Data protection is also a focus of the draft legislation. According to EU officials, offline transactions carried out using a future digital euro system would require consumers to disclose less information than is necessary for online purchases. The amount of information required would be the “same as what they disclose when they take cash out of an ATM.”

The proposal also specifies that individuals should receive access to “basic digital euro services” at no charge. Additionally, individuals without bank accounts would have the ability to open digital euro accounts at a post office or another public sector organization.

The draft legislation also seeks to establish digital euro rules for merchants. Businesses would be required to accept payments made using the digital euro system. However, the European Commission is proposing to exempt “very small merchants” that choose not to accept digital payments.

Officials detailed the draft legislation today in conjunction with a second proposal designed to ensure cash continues to be widely accepted as a means of payment within the EU. Under the latter proposal, EU member states would be required to ensure cash “remains easily accessible” for people and businesses. Member states would be expected to monitor that those objectives are being met, as well as report potential issues. 

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