“Portugal has expressed some concerns related to the digital euro in these meetings, particularly issues of privacy, competition, and the limits each individual can hold,” said Finance Minister Joaquim Miranda Sarmento.
Speaking on the second day of the informal meeting of European Union finance ministers in the Danish capital, during Denmark’s rotational presidency, the minister noted, “There must be a balance between what is a public instrument promoted by the European Central Bank and the existing financial system.”
On Friday, during this informal meeting, the eurozone finance ministers reached a political agreement on the framework for creating the digital single currency, anticipating future holding limits, as announced by the European Commission, which expects a European consensus by the end of the year.
This is an electronic version issued and guaranteed by the European Central Bank (ECB), with the same value as physical euro notes and coins.
After the initial approval, the goal would be to reach a common position among EU countries by the end of the year, for the Council to then start negotiations with the parliament.
The specific holding limits, i.e., how much digital currency each person can hold, are yet to be defined. If the limits are low, they may not be attractive, but if they are high, they could threaten financial stability.
The European Commission proposed the legislative package on the digital euro two years ago, but the decision is up to the Member States, with the virtual currency being designed by the ECB.
The idea is for the digital euro to compete with online payment services like PayPal or Apple Pay from the United States or Alipay from China.
It is expected that by 2027, these technological platforms for retail payments—predominantly from the United States and China—will be responsible for 40% of e-commerce and 27% of in-store payments in Europe.
Currently, the ECB is preparing the creation of this digital euro.
Following the launch of the pilot project in 2021, the central bank has been developing methodology and limitations, creating a guidebook, and finalizing the technical aspects.
By the end of 2025, the ECB Council should decide whether to move to the next phase of the project.
This is part of a legislative package released by the European Commission in June 2023 to advance this new availability within the European Union while intending to safeguard the use of cash euro.
As part of this package, the institution proposed a digital euro to be available like cash, cards, or apps, enabling citizens and businesses to pay at any time and anywhere in the eurozone, functioning as a digital wallet.
The digital euro will be the responsibility of the ECB, which will decide if and when to issue this virtual version of the single currency.
A digital currency is an asset similar to cash, stored or exchanged through online systems managed by the central bank.
