European finance ministers oppose digital euro being programmable money – Ledger Insights

In a statement on the digital euro yesterday, the Eurogroup said it does not support a potential digital euro as programmable money. The Eurogroup is made up of the finance ministers of the European countries that have adopted the euro as their currency.

It clarified that its definition of programmable money has restrictions on what the money can be spent on or time limits on when the digital currency can be used. However, he is happy that users can automatically make payments when certain conditions are met.

The statement says that “the digital euro must be convertible at all times and throughout the euro area on a par with other forms of the euro, such as banknotes and commercial bank deposits. Therefore, the digital euro cannot be a programmable money”.

By contrast, several other countries are exploring central bank digital currencies (CBDCs) to include programmable money functionality, especially for government benefits. For example, Singapore is testing “special purpose money” as part of its Project Orchid retail CBDC initiative. Consider the money to be similar to a voucher which could be a government voucher or even a private gift certificate. In Brazil, one of the CBDC trials focuses on supporting farmers and restricting farm loans for use on agricultural products.

Returning to the Eurogroup, he considers that its role is to provide political information for the digital euro. It is part of the European Council, made up of the heads of state of European countries, which has a say in any possible CBDC legislation passed together with the European Parliament. He reiterated that legislation on the digital euro will be proposed in the first half of this year.

The Eurogroup outlined other features it wants to see in a potential digital euro. Privacy should be noted. Unsurprisingly, it wants to provide privacy but also ensure compliance with AML, tax laws, and penalties. The two invariably offset each other, but while the ECB has proposed currency and transaction limits based on identity level, the Eurogroup proposes more privacy for less risky transactions.

Other desirable features of the digital euro include:

• supplement rather than replace cash
• safeguard financial stability
• ensure pan-European reach
• appropriate regulatory measures
• interoperability with CBDCs from other countries.

Meanwhile, the ECB is continuing with its investigation into the digital euro. It recently invited technology vendors to provide estimates as part of its market research to plan for a potential “realization phase.” In the fall, it will be decided whether to advance to that phase, which is different from confirming the launch of a CBDC.