COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT Accompanying the documents Proposal for a Regulation of the European Parliament and of the Council on the establishment of the digital euro and Proposal for a Regulation of the European Parliament and of the Council on the provision of digital euro services by payment services providers incorporated in Member States whose currency is not the euro and amending Regulation (EU) 2021/1230 of the European Parliament and the Council and Proposal for a Regulation of the European Parliament and of the Council on the legal tender of euro banknotes and coins
Date: 2023-06-28
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: Economic and Monetary Union, electronic banking, euro, euro area, financial services, financial transaction, issuing of currency, money, payment, regulation of transactions

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 28.6.2023  SWD(2023) 234 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT     Accompanying the documents    Proposal for a Regulation of the European Parliament and of the Council on the establishment of the digital euro  and  Proposal for a Regulation of the European Parliament and of the Council on the provision of digital euro services by payment services providers incorporated in Member States whose currency is not the euro and amending Regulation (EU) 2021/1230 of the European Parliament and the Council  and  Proposal for a Regulation of the European Parliament and of the Council on the legal tender of euro banknotes and coins {COM(2023) 364 final} - {COM(2023) 368 final} - {COM(2023) 369 final} - {SEC(2023) 257 final} - {SWD(2023) 233 final}  
 
 
Need for action 

Digitalisation and new technologies are increasingly shaping European  people’ lives and the 
European  economy,  and  this  trend  is  also  reflected  in  payments.  Cash  is  the  only  form  of 
central bank money available to the public so far, yet it cannot be used in the digital sphere. 
This means that for an increasing share of payments, people and businesses do not have the 
possibility  to  opt  for  central  bank  money  anymore.  Furthermore,  people  and  businesses  are 
increasingly shifting towards private digital means of payment, also in situations where cash 
is usable. The absence of a retail central bank digital currency in the euro area may gradually 
undermine the monetary sovereignty of the  Eurosystem.  The lack of a widely available and 
usable central bank money in the digital age could also diminish trust towards private money, 
which  relies  on  convertibility  at  par  with  public  central  bank  money.  Finally,  the  digital 
economy also needs a risk-free central bank digital currency to support industry 4.0 and web3. 

Possible solutions 

Existing or planned EU public (e.g. instant payments) or private initiatives are predicated on 
the use of private forms of money and therefore do not address the underlying issue regarding 
the form and availability of central bank money. In contrast, the problem can be addressed by 
a  digital  version  of  central  bank  money,  i.e.  a  digital  euro  to  be  made  available  for  retail 
payments. 

A  new  form  of  central  bank  money  available  to  the  general  public,  alongside  the  euro 
banknotes  and  coins,  shall  be  established  and  regulated  in  its  essential  features  by  an  EU 
Regulation based on Article 133 of the TFEU. 

The present analysis assesses the impact of establishing a digital euro and of regulating its key 
features in relation to the general objective of ensuring that the central bank money issued by 
the  European  Central  Bank  (ECB)  can  support  the  EU’s  economy  in  the  digital  age,  while 
safeguarding  the  role  of  cash.  It  furthermore  takes  into  account  two  specific  objectives:  1) 
reinforcing the euro’s monetary anchor in the digital age by ensuring that central bank money 
in both its physical and future digital form is widely available to and accepted by users in the 
euro area and tailored to their needs, while preserving financial stability, and 2) strengthening 
the  EU’s  open  strategic  autonomy  by  increasing  the  euro’s  competitiveness  vis-à-vis  other 
currencies,  third  country  CBDCs  and  other  privately  issued  means  of  payment  not 
denominated in euro.  

Several options are possible for implementing a digital euro. The proposed options examine 
how the digital euro could be regulated to achieve the policy objectives while balancing key 
trade-offs:  (i)  enabling  wide  usage  while  ensuring  fair  competition  with  private  payment 
solutions,  (ii) protecting  privacy while  ensuring traceability, (iii)  ensuring wide usage while 
protecting financial stability and credit provision  and  (iv) supporting international use while 
mitigating risks for non-euro countries and the Eurosystem.  

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Impacts of the preferred option 

Based on the comparison of effectiveness, efficiency and coherence, the below combination 
of options is found to be the preferred one: 

  Providing  legal  tender  status  to  the  digital  euro  with  an  obligation  for  all  payees  to 
accept it, though with justified and proportional exceptions (Option 1c) and voluntary 
or targeted mandatory distribution arrangements (Option 1e/f). To avoid overcharging 
merchants,  maximum  mandatory  caps  should  be  determined  on  the  basis  of  a 
methodology set by the legislature and developed by the ECB. (Option 1h). To ensure 
coherence between all forms of public money, it is furthermore suggested to regulate 
the legal tender status of cash in a parallel legislative proposal. 

  Providing  for  a  high  level  of  privacy  for  low-value  offline  proximity  payments  by 
processing  personal  data  related  to  users’  identity  at  the  moment  of  opening  digital 
euro  accounts  with  payment  service  providers  but  not  disclosing  transaction  data  to 
payment service providers, while online payments would be treated like private digital 
means  of  payment  in  consistency  with  current  consistently  with  AML/CFT 
requirements (Option 2c, 2d). 

  Reducing the risk to financial disintermediation and financial stability by allowing the 
European Central Bank define and implement tools to limit the digital euro’s store of 
value function (Option 3b). 

  Making  the  digital  euro  first  available  to  natural  and  legal  persons  residing  or 
established in the euro area, as well as visitors (Option 4c), but possibly expand it at a 
later stage to non-euro area Member States and third countries, subject to agreements 
and/or  arrangements  with  the  Union  and/or  the  European  Central  Bank,  so  as  to 
mitigate  risks  to  the  financial  stability  and  monetary  sovereignty  of  both  the 
Eurosystem and countries outside the euro area. (Option 4b). 

This combination of options would result in several benefits. Users would have more choice 
and security in their payment decisions as they also could use central bank money, not only 
commercial  bank  money,  in  digital  payments.  Furthermore,  they  would  benefit  from  the 
maintained trust in the monetary system that is provided by a digital monetary anchor, which 
ultimately  also  supports  the  conduct  and  effectiveness  of  its  monetary  policy  and  thus 
contributes  to  financial  stability  and  a  stable  macroeconomic  environment.  An  easy-to-use 
digital  euro  would  strengthen  financial  inclusion  in  a  digitalised  society.  Merchants  would 
likewise enjoy an increased choice and benefit from more competition on the pan-European 
payment  market,  especially  when  negotiating  with  private  payment  providers.  Payment 
services  providers  (PSPs)  could  distribute  the  digital  euro  to  their  customers,  generate  fees 
and  offer  additional  innovative  services  built  on  the  digital  euro.  Moreover,  a  digital  euro 
would  support  open  strategic  autonomy  by  creating  a  new  payment  scheme  that  would  be 
more  resilient  against  potential  external  disruption.  A  digital  euro  could  also  support 
European businesses for future use cases in industry 4.0 and web 3 by giving them a public 
alternative for conditional payments. In relation to the international role of the euro, while a 
digital euro would in a first step focus on the euro area, at a later stage use outside the euro 
area could be envisioned, provided that financial stability and monetary sovereignty risks are 
sufficiently contained. This could then promote trade and reduce exchange rate risks. 

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The implementation costs of the initiative would fall on the Eurosystem, merchants and PSPs. 
The Eurosystem would have to invest in setting up the digital euro infrastructure (both online 
and offline), including the network and settlement  infrastructure. PSPs’ one-off costs would 
include  adapting  front-end  systems  (apps,  online  banking,  ATMs),  back-end  systems 
(including  both  the  payer  and  payee  (acquiring)  side  and  integration  with  settlement  and 
account  management  systems),  and  adapting  AML/KYC,  anti-fraud,  accounting  and  other 
business processes. Merchants would have to pay the costs of making their terminals capable 
of accepting digital  euro payments as well. For proportionality reasons, the preferred option 
foresees  exceptions  to  the  mandatory  acceptance  for  some  categories  of  payees  on  the 
understanding  that  merchants  and  NGOs  accepting  private  electronic  means  of  payment 
would have to also accept digital euro payments. There might be also some learning costs for 
consumers, similarly to the learning costs associated with online banking or new apps.  

The initiative would also trigger some operating (recurrent) costs. The Eurosystem is expected 
to  incur  costs  in  relation  to  e.g.  running  the  digital  euro  scheme,  marketing  the  initiative, 
educating  consumers  and  merchants,  providing  customer  support  and  operating  the  IT 
infrastructure.  PSPs  would  have  to  bear  the  costs  of  operations  such  as  related  customer 
support,  AML/CFT  and  fraud  checks,  and  transaction  management.  PSPs’  fee  and  interest 
income  may  also  be  affected.  Merchants  would  have  to  pay  the  transaction  fees  and  the 
annual  maintenance  and  license  fees  of  their  POS  terminals.  However,  it  is  reasonable  to 
assume  that  these  costs  will  not  be  higher  than  the  fees/costs  of  existing  payment  means 
(mostly cash and debit cards) that the digital euro would replace. People could benefit from 
‘basic use’ digital euro services for free and pay transaction fees for additional services, which 
are  also  expected  to  be  comparable  with  the  costs  of  existing  payment  means.  Particular 
attention  will  be  paid  in  the  legislation  to  ensure  that  the  fees  levied  on  merchants  are 
proportionate.  

Payments with digital euro will face similar cyber, IT and other operational risks as existing 
payment systems. In addition, the Eurosystem may face increased cyber and operational risks 
as  issuer  of  a  digital  euro.  Issues  pertaining  to  cyber  security  are  addressed  by  existing  and 
upcoming  legislation  that  digital  euro  payments  would  also  be  subject  to.  This  includes 
requirements under PSD2, the Digital Operational Resilience Act (DORA)1 that PSPs would 
be subject  to,  and the Cyber Resilience Act.  Furthermore, the Eurosystem  is  expected to  be 
subject to the new Cybersecurity Regulation proposed in March 2022 by the Commission.2  

Overall, the assessment concludes that the long-term benefits of a well-designed digital euro 
with  appropriate  safeguards  outweigh  its  costs.  What  is  more,  the  costs  of  no  action  can 
potentially be very large.  

1  Proposal  for  a  REGULATION  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE  COUNCIL  on  digital  operational 
resilience for the financial sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No 600/2014 and 
(EU) No 909/2014 EUR-Lex - 52020PC0595 - EN - EUR-Lex (europa.eu) 
2 Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL laying down measures for 
a  high  common 
the  Union. 
https://commission.europa.eu/publications/proposal-cybersecurity-regulation_en 

institutions,  bodies,  offices  and  agencies  of 

level  of  cybersecurity  at 

the 

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