Digital Euro Act coming in early 2023: EU finance chief

The European Commission stated on Wednesday that legislation for a digital euro will be proposed in early 2023.

The act will provide the legislative framework for the European Central Bank's continued technological development on digital euro coins.

At a fintech conference on Wednesday, EC finance chief Mairead McGuinness officially revealed the EU's formal study of digital euro legislation, as reported by Politico.

The Commissioner for Financial Service said, "Our goal is to table legislation in early 2023." "A targeted legislative consultation in the coming weeks."

Central banks worldwide are creating digital money to protect against the popularization of cryptocurrencies, which has prompted Big Tech to look for methods to join the payments business. One of the biggest surprises came when Meta, introduced a cryptocurrency alongside 25 other corporations a few years ago.

The European Central Bank (ECB) has been experimenting with digital euro designs and technologies, with a prototype due in late 2023. The consent of Eurozone governors is required for a digital euro to be introduced. If lawmakers approve, the digital euro could be in circulation by 2025.

For the legislation process in the EU, that schedule is ideal. Before becoming legal, the act needs to go through deliberations in EU capitals and the European Parliament.

The virtual euro is a central bank digital currency (CBDC), an investment vehicle developed by central banks across the globe. The heightened interest in CBDCs stems from worries that the adoption of cryptocurrencies may threaten local currencies.

The EU's executive authority plans to release a public consultation next month. The consultation will not repeat the ECB's call for suggestions from 2020, which revealed that respondents' top priority was payment privacy. Instead, the Commission's survey will emphasize how the virtual euro could be applied in everyday life, including processing transactions.

In 2021, the European Central Bank (ECB) conducted research and published a report on digital currencies. The report stated that a digital euro could significantly lower interest rates, expedite transactions, and reduce the use of banknotes.

Regardless of the anticipated advantages, central bankers face opposition in gaining popular backing. The majority of respondents oppose government-backed digital currencies, according to research undertaken by Germany's central bank and the UK economic affairs committee, arguing suspicion on economic advantages and concerns over government surveillance.

EU finance chief Mairead McGuinness said, "Our goal is to table legislation in early 2023." "A targeted legislative consultation in the coming weeks."

Official interest in CBDCs has surged globally, with Kenya's central bank requesting public consultation on a digital shilling and Thailand currently setting regulations for a planned retail CBDC. The Sand Dollar, introduced by the Central Bank of the Bahamas in October 2020, was one of the first CBDCs to be introduced.

However, in the area of digital currency, China enjoys the first-mover advantage. With sustained and major advances forward in the CBDC field, the country has eclipsed the rest of the world.

In 2014, the People's Bank of China shifting to a digital yuan. Meanwhile, India's finance ministry has announced that a digital equivalent of the rupee will be available later this year.

Last year, Germany and France pressed the ECB to expedite the process, concerned that the eurozone might be left behind.