How would the 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 the 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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Everyday purchases
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
You could make direct payments from wallet to wallet using a phone or watch, just as if you were handing cash back to a friend who has lent you money. With the digital euro, this could work either online or offline.
Going abroad
When visiting another euro area country it’s usual to carry cash to be sure you can make payments and avoid extra fees for making withdrawals. With the digital euro, you would be able to pay anywhere in the euro area, free of charge.
Shopping online
The digital euro would be available in situations where cash is not, for example when shopping online. The digital euro would provide a safe and easy means of payment backed by the ECB, a public institution.
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.