Given the heightened public and media interest, we wish to stress again that the planned introduction of the digital euro does not mean that cash, i.e. euro banknotes and coins will be eliminated.

The role of cash has been widely discussed in the past years, particularly following the surge in the use of digital payments triggered by the COVID-19 pandemic. The falling share of cash in day-to-day transactions raised concerns as regards the future of cash. However, the demand for cash remains robust across all age groups. Also, according to the 2024 Study on the payment attitudes of consumers in the euro area, SPACE, a majority of Europeans consider it important to have the option to pay with cash and expect this option to remain accessible.

In response, the European Central Bank and the European Commission are actively developing strategies to safeguard euro cash and ensure its relevance in the evolving payment landscape. In June 2023, the European Commission unveiled the Single Currency Package, comprising two key legislative proposals; one to safeguard the status of euro banknotes and euro coins as legal tender (Regulation of the European Parliament and of the Council on the legal tender of euro banknotes and coins), and the other on the digital euro (Regulation of the European Parliament and of the Council on the establishment of the digital euro). The digital euro, euro banknotes and euro coins are designed to complement each other, expanding the range of payment options available and offering cash in both physical and digital form.

The European Central Bank (ECB) and the Croatian National Bank (CNB) both support the Commission’s proposed regulation enshrining the legal tender status of euro banknotes and euro coins. The regulation will clarify that merchants and service providers must, in principle, accept cash, except in exceptional circumstances (e.g. where an alternative payment method has been agreed in advance). It will also require euro area member states to guarantee citizens and corporates sufficient access points for cash withdrawals and deposits, such as ATMs, bank branches, or other channels to ensure that cash remains readily available to all, including those who rely on it exclusively. The aim is to preserve cash as an inclusive, secure and reliable means of payment that will stand side by side with digital forms of payment.

The European Central Bank has also launched a design competition for a new series of euro banknotes, aiming to enhance their modernity and security. This initiative underscores the continued commitment to cash as a reliable means of payment and store of value, both within the euro area and beyond.

Cash plays a crucial role in financial inclusion and in maintaining the resilience of our payment systems and economies. In times of crisis, such as cyberattacks or power outages, cash serves as a dependable alternative. This was evident during the natural disasters that affected parts of the euro area last year. The Eurosystem remains firmly committed to ensuring that cash continues to be widely available and accepted across Europe.

A proposal for a Regulation of the European Parliament and of the Council of the EU on euro banknotes and coins as legal tender is currently under negotiation among Member States. Both this Regulation and the one concerning the digital euro are expected to be adopted by the European Parliament by the end of this year.

DIGITAL EURO

The digital euro is digital money issued by the Eurosystem, that is, by the European Central Bank and national central banks of those EU countries that have adopted the euro. The idea of introducing a digital euro as a form of central bank digital currency for euro area citizens emerged as a response to a growing demand for secure and reliable electronic payments in Europe.

Citizens would be able to use a digital euro in everyday transactions, making payments by means of a card or a mobile application or any other means that meets technical requirements set out in the legislative proposal at the time when a digital euro is issued, and is also user-friendly and secure to use. It would be widely available, reliable, secure, effective, and designed in accordance with the law, offering the highest possible protection of privacy.

As a public good, the digital euro will be available to all euro area citizens at all times and in all places. Its basic use will be free of charge.

Importantly, the digital euro will not function as a bank deposit and will not accrue interest. Claims suggesting that negative interest rates could apply to digital euro accounts are unfounded. Similarly, assertions that the digital euro could restrict investment in specific securities are incorrect.

Consumers will be able to make instant, secure payments in digital euros, at physical and online points of sale, and between individuals, regardless of their location within the euro area or their payment service provider. The first step will be to open a digital euro wallet with a bank or licensed electronic payment provider.

Once the wallet is set up, users can fund it via a linked bank account or by depositing cash and then start making payments in digital euro from their wallets.

Received digital euros can be stored in the wallet (up to a certain limit) or transferred to a bank account manually or automatically. Payments in digital euro, in physical stores and online or between consumers would always be secure and instant.

A digital euro would offer both online and offline functionalities, meaning that users will be able to use it in situations of limited connectivity or emergency, that is, in case of a contingency or extraordinary circumstances.

We stress that privacy is a cornerstone of the digital euro’s design. The ECB, CNB, and the Eurosystem, as scheme owners and settlement operators, will not have access to or store users’ personal data.

The digital euro project is currently in its preparatory phase, which includes building the technical infrastructure, establishing the legislative framework, and researching user preferences. The ECB is expected to decide by the end of 2025 whether to proceed to the next phase. The final decision on its introduction will depend on the outcome of the democratic process in the European Parliament.