How would a digital euro work?
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 a digital euro, only instead of converting the money in your bank account into cash, you would convert it into digital euro.
When could you use the digital euro?
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Whether it's buying your morning coffee or paying the babysitter, you could pay with your digital euro wallet. The digital euro would be available for any electronic payments in shops, online or from person to person.
Payments between friends
Make direct payments from wallet to wallet using a phone or watch, just like you would give cash back to a friend who has lent you money. With a digital euro, this could work either online or offline.
Whenever we visit another euro area country, we tend to carry cash to make sure we will be able to make payments, and to avoid extra fees when withdrawing cash. With a digital euro, you would be able to pay anywhere in the euro area, free of charge.
A digital euro would also be available in situations where cash is not, for example when shopping online. A digital euro would provide a safe and easy means of payment backed by the ECB, a public institution.
Much of our daily spending goes towards regular payments, such as paying the rent at the start of each month or paying for childcare. That’s why a digital euro would facilitate automated payments for people who want to use this function.
However, it would never become programmable money. Programmable money is digital money used for a restricted purpose or duration, like a voucher.
By contrast, a digital euro will be unrestricted and always maintain its value. We don’t want a digital euro to come with any constraints on where, when or with whom people and business could use it.
A cap on holdings
We would set a limit for 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.