A Digital Euro for EU Citizens

Christy Ann Petit (DCU Brexit Institute)

The much awaited Single Currency Package was finally published by the European Commission on 28 June 2023, giving the legal grounds and foundations for a potential digital euro in the euro area. This places the European Central Bank (ECB) among the major central banks in the world considering and developing projects for Central Bank Digital Currencies (CBDCs) across the globe (see the Bank for International Settlements’ innovation hub here). The digital euro ‘project’ was launched by the Governing Council of the ECB in the summer of 2021 to investigate the various options under which it could be distributed (see the timeline here). The main objectives of the digital euro are threefold: preserving the role of public money as a monetary anchor in the payment system, coping with the general decline of the use of cash (with alternative digital payment solutions), and more broadly, accompanying the digital transition in our 21st century society. From the perspective of the end users – citizens and merchants – this change will pave the way for integrated and inclusive payments that should be accessible both online and offline.

The digital euro raises operational challenges considering its design features, distribution, and settlement. And here, it is now clarified that banks and payment service providers will have a role in the distribution of digital euros to people and businesses, in a tier model. Hence, this tier model will not create a direct relationship between the ECB and the EU citizens via an account held at the central bank. Moreover, several policy and legal issues are discussed, from ensuring privacy and data protection to legal tender. During the last two years, the ECB engaged on the digital euro design options through focus groups (with citizens and merchants), as well as with policymakers in different forums. It has engaged with the European Parliament’s ECON Committee (see for instance a hearing of ECB Executive Board Member Fabio Panetta), the Eurogroup, the ECOFIN in inclusive format, among others. Henceforth, it will be examined by the co-legislators following the initiative by the European Commission.

The European Commission’s package includes three legislative acts to set the legal framework for the digital euro and its essential elements:

Before this initiative, the literature has discussed the EU legal bases available to adopt a digital euro (see a recent account before the legislative proposals, S. Grünewald, 2023). Overall, as I argue in a forthcoming chapter, the right to issue euro banknotes can encompass the right to determine the format or medium of ‘euro banknotes’, which is, in that case transposing to the digital reality of the economy.

Moreover, the proposal on legal tender echoes the concerns to equally guarantee the acceptance, access and ultimately, the use of banknotes, coins, and new digital euros alike. The objective can be praised and yet, might be difficult at the outset considering the low effectiveness of legal tender in some Member States currently. We observe cases where access to cash is not fully guaranteed (ATMs or branches of banks unavailable in some areas), and cases where the acceptance of cash suffers several exceptions in some Member States. Therefore, the legislative proposal on the legal tender of euro banknotes and coins is a significant development by framing the concept of legal tender in a directly applicable Regulation in lieu of the non-binding EU Recommendation of 22 March 2010 on the scope and effects of legal tender of euro banknotes and coins. It also codifies the jurisprudence on legal tender by the Court of Justice of the EU (Joined Cases C-422/19 and C-423/19, Dietrich and Häring).

It is very important to note that the digital euros would not replace euro banknotes and coins but will complement them. Moreover, it would constitute a payment alternative for free for its basic services, in addition to the means of payment that exist today (public money and private payment solutions offered by different payment providers). Concretely, a citizen will be able to hold digital euros in parallel with card-based payments, instant payments and other payments means. Last but not least, the digital euros could be accessible by consumers and businesses beyond the euro area under specific circumstances (account open when residing in the euro area, consumers travelling to the euro area, and some non-euro area residents, see Articles 18 to 21 of the legislative proposal). The ECB and the non-euro area National Central Banks will adopt dedicated arrangements and agreements – with an expected easier route for European Economic Area countries.

The co-legislators will discuss the proposals put forward by the European Commission, while the ECB will pursue its work to decide on the potential technical features in parallel. In autumn, the ECB Governing Council will decide to continue (or not) by launching the ‘realisation’ phase that is to follow the current ‘investigation phase’. Concretely, after the legislative process is complete, the ECB will decide whether and when to issue the digital euro – as the decision-making body in charge of single monetary policy in the euro area. In the meantime, you may take part in the survey on seven new ‘themes’ for the redesign of our euro banknotes by the end of this summer.


Christy Ann Petit is an Assistant Professor at the School of Law and Government of Dublin City University (DCU) and Deputy Director of the DCU Brexit Institute. She is the module coordinator of ‘EU Banking and Finance Law & Policy after NGEU’, a Jean Monnet Module funded by an Erasmus + grant from the European Commission (2022-2025). Her research interests cover EU Law, financial supervision and regulation, the law of the Banking Union, the Economic and Monetary Union, and central banking.


Credits: European Commission


The views expressed in this blog reflect the position of the author and not necessarily that of the REBUILD Centre Blog.

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The views expressed in this blog reflect the position of the author and not necessarily that of the REBUILD Centre Blog.