Imagine you go to an automated teller machine (ATM) and withdraw €100. Your bank account balance goes down by €100, but you now have €100 in cash with which to make payments. The same process would apply to the digital euro, only instead of converting the money in your bank account into cash, you would convert it into digital euro.
Your digital euro explained
- The first step would be to set up your digital euro wallet through your bank. But you could also go to a designated public authority, for example a post office, to do this.
- Once your digital euro wallet is set up, you could put money into it via a linked bank account or by depositing cash. You could then start making payments using the digital euro in your wallet.
- Whenever you receive money in digital euro, you would keep it in your digital euro wallet, up to a certain limit, or deposit it in your bank account. You could either do this manually or set it up automatically.
- Digital euro payments would always be safe and instant – be they in physical stores, online shops or between people.
When could you use the digital euro?
- Everyday purchases
- Payment between friends
- Going abroad
- Shopping online
Additional functionalities
- Making recurring and conditional payments: Much of our everyday spending goes towards regular payments, such as paying the rent at the start of each month or paying for childcare. That’s why the digital euro would facilitate automated payments for people who want to use this function. Participants in the digital euro innovation platform have tested conditional payments, such as “pay-on-delivery”, “pay-per-use” or milestone-based payments. With conditional payments, your payment is completed only once certain conditions have been met. For example, a payment for a takeaway dinner is only completed once the meal has been delivered. The digital euro would never become programmable money though. Programmable money is digital money used for a restricted purpose or duration, like a voucher. By contrast, the digital euro will be unrestricted and always maintain its value – just like cash. We don’t want the digital euro to come with any constraints on where, when or with whom people and business could use it.
- How many digital euro can i have in my wallet? A limit would be set on the amount of digital euro that a person or company could hold in their digital euro wallet. This would help prevent excessive outflows of deposits from banks, preserving financial stability. Users wishing to pay more than the set limit would be able to do so by linking their digital wallet to their bank account.
Source: European Central Bank