15-09-2023

Vice-Minister of Finance M. Liutvinskas: “To be successful, the digital euro project needs to create added value for people and businesses”

During the debate at the EUROFI Financial Forum in Spain, Vice-Minister of Finance M. Liutvinskas stressed that to be successful, the digital euro project needs to generate tangible benefits for consumers, traders and the financial sector. In order to maximise the potential of a digital euro, it is important to ensure the wide use of this payment instrument, which will require appropriate technological and regulatory solutions and effective communication to inform the public.

“A digital euro would be a virtual equivalent of cash, the security of which would be guaranteed by a central bank. It is important to emphasise that a digital euro would not replace cash but would complement it. The digital currency is being developed as a universal and easily accessible means of payment for residents, providing fast and cheap payments across the euro area. Moreover, some payments could be made without an internet connection. The basic basket of services should be free of charge for consumers and prices for traders – competitive for current payment service providers. User-friendliness and economic incentives for people and traders are essential preconditions for the successful and widespread use of the digital euro project in practice”, said Vice-Minister of Finance during the debate.

Mr M. Liutvinskas also stressed that a digital euro would be a product based on cooperation between the public and private sector able to contribute to creation of innovation and new business models in the field of payments. The European System of Central Banks is expected to support the basic payment infrastructure, while the private sector – banks, e-money and payment institutions – would be responsible for all services provided to residents and businesses, including opening an account, implementing anti-money laundering, etc.

The private sector is also expected to be able to develop additional services, e.g. related to conditional or automatic payments, which will create added value to consumers. During the debate, the Vice-Minister emphasised the importance of ensuring a level playing field for all market participants in order to exploit the potential of innovation.

Although work on the development of a digital euro is still in the investigation phase, there is already a need for effective communication between the responsible authorities on the characteristics and expected benefits of this product. The public needs to be informed that a digital euro will be a means of payment that is fully equivalent to cash, but much more convenient in many respects. For example, it will be possible to pay in a digital euro in online sales, which is impossible to do with cash. It is also important to properly communicate about high data security standards and privacy level of the digital euro, including that payments will be anonymous when paying with a digital euro without an internet connection, thus reflecting the characteristics of cash.

On 14 July 2021, the Governing Council of the European Central Bank (ECB) decided to launch the investigation phase of a 24-month digital euro project. After its expiry, in October this year, the Governing Council of the ECB will decide whether to move to the next phase of testing and tests of a digital euro in a real environment. This phase is expected to last at least 3 years. More information on the digital euro can be found here.

On 28 June 2023, the European Commission presented a legal proposal for the creation of a digital euro establishing the status of a digital euro as a legal payment instrument, as well as defining other important functionalities of a digital euro. More information about the proposal can be found here.