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Debate on digital euro goes back six years
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Some concerned about stability risk
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Spanish finance minister says quick progress needed
By Jacob Gronholt-Pedersen and Jan Strupczewski
COPENHAGEN, Sept 19 (Reuters) - European Union finance
ministers will seek to reach a common position on Friday on how
to set up a digital euro currency that could become an
alternative to the now dominant U.S.-based Visa and Mastercard ( MA )
systems.
Discussions on creating a digital equivalent of the euro
currency, now used in 20 European countries, have been going on
for six years, but the debate heated up this year because the EU
is now keen to reduce its dependence on other countries in key
areas like energy, finance and defence.
"We need to go ahead with our own digital payment system to
reduce dependency on other providers," Spanish Finance Minister
Carlos Cuerpo told reporters on entering the ministers' talks in
Copenhagen.
"I think that's a key area of progress where we need to
advance and make progress quickly. And this is part of the
urgency that we've seen in ministries, in the political
environment, and this is driving also the agenda," he said.
DELAYS TO LEGISLATION
While there appears to be widespread support for the digital
euro on the political level, the European Parliament has not
passed the necessary legislation, arguing that some of the
details need more work.
Still, the ECB hopes that all legislation could be in place
in the first half of next year for the project to go ahead.
EU Economic Commissioner Valdis Dombrovskis also stressed
the need for Europe to have an independent payments system for
online shopping as more and more business moves to the internet.
"It's important to strengthen Europe's strategic autonomy,
to not have to rely on foreign payment schemes, having a proper
European, pan-European payment scheme," he said on Friday.
The ECB has presented plans for a digital currency -
essentially an online wallet guaranteed by the central bank - in
part as an electronic means of payment that does not rely on
dominant U.S. providers such as Visa, Mastercard ( MA ),
or PayPal ( PYPL ).
Some EU countries have their own national digital payments
systems, but none that would be accepted across the 27-nation
bloc.
Though the European Commission proposed digital euro
legislation in June 2023, not much has happened since. Some
lawmakers and bankers are concerned that the digital euro would
take away business from the banking sector and create stability
risks, like digital runs on banks.
Once Parliament approves legislation, the ECB will still
need around two-and-a-half to three years to actually launch the
digital euro.
"The ECB can provide the basic architecture on which the
private sector can then build the necessary solutions,"
Dombrovskis said.
"We see it as an important project, both in terms of
technological developments, but also in terms of EU strategic
autonomy," he said.