European Central Bank Would Need To Set Limits on Use of Digital Euro Under Draft Proposal: Bloomberg

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June 26, 2023 06:55 EDT

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The European Union’s executive branch will unveil plans for a digital euro that would require the European Central Bank to set limits on its use, according to a report from Bloomberg News. 

The ECB would have to decide on the instruments needed to ensure financial stability, according to a draft European Commission proposal on setting up a digital euro obtained by Bloomberg. 

“With a view to ensuring the stability of the financial system, the availability of credit and the transmission of monetary policy, the use of the digital euro as a store of value may be subject to limits,” the draft proposal said, according to Bloomberg.

European Union finance ministers will meet on Thursday in Luxembourg to discuss the project, according to Bloomberg. 

The EU is contemplating launching the central bank digital currency and launched an investigation phase in October 2021. 

That phase is expected to conclude in October of this year, according to the ECB’s website. 

“We are looking at how a digital euro could be designed and distributed, as well as the impact it could have on the market. Then, we will decide whether to start the process of actually developing it,” the ECB said. 

Around the world

The US Treasury is also actively looking into the potential of a US CBDC, most recently focusing on privacy, an official said on Tuesday. 

Some US politicians, including Florida Gov. Ron DeSantis, have argued that a CBDC would violate privacy and said it promotes “government-sanctioned surveillance.” 

Advocates say CBDCs can provide better financial services to their citizens.

Elsewhere eleven countries so far have launched a CBDC and all G7 economies have moved into the development stage of a CBDC, according to the Atlantic Council. 

Now 114 countries, representing over 95 percent of global gross domestic product, are exploring a CBDC, when in May 2020, only 35 countries were considering it, the council said.