- An ECB official argued against an EU lawmaker’s proposal that the digital euro should only function offline.
- The central bank’s lead economist said the measure would prevent electronic money from being used for online shopping and other remote transactions.
Fernando Navarrete, member of the European Parliament, recently proposed an offline-only solution for the digital euro. He argued in a report last month that the European Central Bank (ECB) should only introduce an online version of the digital currency in the absence of a better alternative from the private sector that could unite the region’s fragmented payments network.
Online and Offline Digital Euro
Previously, the ECB pushed for both an online and offline version of the digital euro. It allows people to use the asset as electronic cash to pay for goods and services without fees.
The digital euro’s online feature lets users utilize it for remote payments, including online shopping or P2P (peer-to-peer) transactions, akin to real-time bank transfers. On the other hand, the offline function lets people use it without an internet connection for close-proximity payments via technologies like Bluetooth, Point-of-Sale (POS) systems, or Near Field Communication (NFC).
ECB Official Argues Against Offline-Only Proposal for the Digital Euro
Alessandro Giovannini, a lead economist at the EU Institutions & Fora division of the ECB’s International & European Relations, countered Navarrete’s offline-only proposal for the digital euro. In a statement on Bloomberg, he favored a recommendation by the EU executive in Brussels for the electronic currency’s online and offline operations.
“The question is, would an offline solution solve the problem that we have?” said Giovannini to the press. “The answer, I think, is no.”
The ECB official explained that the offline-only measure would significantly limit the digital euro’s capabilities, as it would prevent its use for online shopping or long-distance fund transfers.
Giovannini pointed out that the ECB will not limit itself to acting only if the private sector fails to arrive at a better solution. He also emphasized that the central bank is not competing with private institutions. Instead, it aims to find a way to strengthen the entire payment ecosystem.
Nonetheless, the economist reminded people that the matter will still be up for the EU Parliament to decide. If the body passes the legislation for the digital euro, he expects a pilot of the initiative to start around 2027. Meanwhile, the pilot’s success would mean the issuance of the electronic currency as early as 2029.
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