Europe’s CBDC Bill Leaked, Interest and Large Holdings Banned

Paigambar Mohan Raj
Source: CEPR

According to a draft law obtained by CoinDesk, paying interest on or extra charges for using a digital euro, the European CBDC (central bank digital currency), would be prohibited. The European Commission was scheduled to present the draft legislation on June 28.

Users can use the CBDC for offline transactions as well, resembling cash payments. As per the text, “The digital euro shall be available for both online and offline digital euro payment transactions.”

The leaked bill also stated that users shouldn’t be able to modify it to restrict onward use. Moreover, the document mentioned that the degree of anonymity for offline use should be “comparable” to taking cash out of an ATM. Furthermore, the European Central Bank (ECB) nor the payment services providers will gain access to personal transaction data. A 2021 ECB survey found that the public’s top priority was privacy. However, if money laundering is suspected, banks can give the information to financial crime authorities.

According to the proposed law, businesses would be required to accept digital euros as legal cash. Moreover, they cannot charge an additional fee for doing so. The law further stated that the CBDC “shall not be programmable.” There were worries that allowing recipients control over how to use the money may restrict fiat currency’s ability to be utilized freely.

When will the digital euro CBDC debut?

The EU is one of many nations throughout the world that is debating whether to issue a digital currency. Other nations include the U.S., U.K., India, etc. The ECB will decide later this year whether to move forward with the CBDC after a protracted inquiry. Fabio Panetta, member of the executive board, said that the decision should be political, rather than just with central bankers. The European Parliament would have to approve any laws required to support the CBDC.

A senior EU official said, “The Council will not decide or formulate a joint opinion on whether a digital euro should be introduced, at least not in any near future. I would not expect the ECB to go forward against a very skeptical bunch of ministers.”