Replacement for cash? How the new 'digital euro' would work for Europeans

"The electronic version of the money used in the 21-nation currency area would be available to use free of charge in shops, online or from person to person. Supporters say it would let Europeans make online payments without relying on US payment systems -- as Europe ramps up efforts to break its dependence on foreign firms including US giants such as Visa and Mastercard. Critics fear it would allow governments to surveil citizens' payments or even cut them off from the money supply."

"EU countries in December gave their green light, putting pressure on lawmakers. There is renewed optimism that the European Parliament could really take that step this year after lawmakers on Tuesday expressed their support for the project. "The introduction of a digital euro... is essential to strengthen EU monetary sovereignty, reduce fragmentation in retail payments and support the integrity and resilience of the single market," an amendment backed by lawmakers said."

"'Not cash replacement' ECB chief Christine Lagarde on Monday sought to assuage privacy fears, telling EU lawmakers that the bank "would not have access to personal data". And while a digital currency has no physical version and does not require the intermediary of a commercial bank, Lagarde insisted it was in "no way intended to replace cash" as she urged lawmakers to move forward."

Europe is accelerating efforts to introduce a digital euro to bolster financial sovereignty and reduce reliance on foreign payment providers. European lawmakers recently backed plans, increasing the likelihood that legislation will move forward this year. The electronic currency would be available free of charge for in-store, online and person-to-person payments. Supporters say it would enable online payments without depending on US payment systems and reduce dependence on firms like Visa and Mastercard. Critics warn it could enable government surveillance of payments or allow authorities to cut individuals off the money supply. The ECB proposed the idea years ago and the EU executive formally proposed it in June 2023. ECB chief Christine Lagarde said the bank would not have access to personal data and that the digital euro is not intended to replace cash.

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