The draft of the European Central Bank digital currency, which is expected to be submitted by the European Commission on June 28, has leaked. According to the leaked draft, interest payments or additional fees for using the digital euro will be prohibited. There are also some suggestions in the draft that crypto market actors might find quite strange.
Accordingly, the draft draws attention to the fact that the central bank digital currency (CBDC) should be immediately available for cash-like offline payments. It is stated that users should not be able to program it to limit its future use.
“Digital Euro will be available for online and offline digital Euro payment transactions as soon as it is first issued,” the text says. It is stated that the level of privacy for face-to-face offline use should be “similar” to withdrawing banknotes from an ATM.
Same level of privacy as withdrawing money from an ATM
For offline transactions, “the European Central Bank or payment service providers will not have access to personal transaction data,” but banks that distribute the currency will be able to pass information on how accounts are funded to financial crime units in case of suspected money laundering.
Privacy emerged as the number one area of public concern about cryptocurrencies in an ECB survey in 2021, with examples from China causing many to worry that a CBDC could lead to large-scale government surveillance.
A few states or economic communities around the world, such as the European Union, the USA and the UK, are among those considering the issue of producing fiat currency in digital form. The European Central Bank (ECB) will take steps to make a decision on CBDC later this year, but ECB executive board member Fabio Panetta said a decision should be a political one, not just for central bankers.
Any legislation to support the digital euro has to be approved by the European Parliament. It is thought that some deputies in the European Parliament are a little skeptical about this, but the country officials in the Council will not completely ignore the project.
Shops will have to accept digital Euros
According to the draft bill, stores will have to accept the digital Euro as legal currency and will not be able to charge any additional fees for use. Only very small businesses or in uncontrolled situations such as a power outage will stores have the right to refuse the transaction.
Another statement added to the text is quite striking: “Digital Euro must be non-programmable”. The main point of this statement is the concern that the possibility of controlling how certain funds are used may limit the nature of fiat currency being freely available.
According to the bill, digital assets should not bring interest: There may be a limitation to being a value tool
The text also envisions measures to prevent the digital Euro from being used as commercial bank savings. From the point of view of the bill, these assets should not yield interest. For this, the ECB will be able to apply more control. Panetta has already stated that the use of digital euros should be limited to an upper limit of around 3,000 euros to enable individuals to use it for daily payments. This item stands out as the item that the crypto community can be most disturbed by.
“Digital Euro settlement infrastructure should aim to adapt to new technologies, including distributed ledger technology,” the bill said, noting that the ECB has yet to make a decision to use a blockchain to support the digital Euro.
It is estimated that a proposal on the legal status of cash money will be presented at the same meeting, along with the draft law, which is expected to be approved at the meeting on June 28.
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