• Digital Euro
• FAQs

Q18: How are European legislators involved in the process?

On 28 June 2023 the European Commission presented the Single Currency Package containing proposals to support the use of cash and to establish the framework for a possible digital euro. The ECB welcomes the fact that the digital euro proposal is accompanied by a proposal to strengthen the role of cash, as both would be legal tender and forms of central bank money. The purpose of the proposed digital euro Regulation is to ensure that any future digital euro would give people and businesses the option to pay digitally using a widely accepted, cheap, secure and resilient form of public money anywhere in the euro area.

The ECB provides support and technical input during the legislative process, as required. The Eurosystem will consider any necessary adjustments to the design of the digital euro that may emerge from legislative deliberations.

The ECB’s Governing Council will not make a decision on whether to issue the digital euro until the Regulation on the establishment of the digital euro has been adopted.

While the purpose of the legislation should indeed be to provide a cheap, secure and resilient form of public money, the digital euro project conducted by the ECB fails to meet these expectations:

First, the amount of €1.3 billion spent on the project (cf. Q27) contradictsthe notion of a “cheap” form of public money, given that other modern payment systems have been created with budgets of less than 1 Also note that this amount is only the budget for developing the digital euro at the ECB and excludes the much higher cost of actually introducing the system across the euro area (KF4).

Second, the design proposed by the ECB suffers from several inherent security flaws, such as the “reverse waterfall” exposing money in associated commercial bank accounts to risks from compromised digital euro accounts, or the offline functionality contradicting Kerckhoffs’ principle (KF2) as discussed further in Q7.

Third, given the additional complexity on top of existing payment infrastructure for the online version (KF5), the proclaimed improved resilience can only be achieved with the offline functionality and is commented on in more detail in Q1.

Running (legislative) design and implementation processes in parallel is a recipe for cost explosions, likely pushing the cost beyond the budgeted €1.3 billion. The ECB is spending a large sum on the project prior to having a legal mandate for it, thus creating a fait accompli bypassing the democratic process and exceeding its mandate.