The Riigkogu European Affairs Committee says it concurs with the Estonian government in adopting a planned digital euro, though only after thorough preparation.
The committee, in line with the opinion of the Riigikogu Finance Committee, opted to approve the government’s positions on proposals from the European Commission on the single currency, including that relating to the digital euro.
The digital euro will in effect be the EU’s answer to the wide variety of private sector secure e-payment solutions.
The EU says it is is developing the digital euro as a way of, for instance, making payments over the phone instead of using cash. The digital euro will reportedly also be usable in making payment in cases where card payments do not go through or are not available, and when buying online.
The EU affairs committee met on Friday to discuss Estonia’s positions on the proposals to adopt the digital euro and agreed with the government that before the adoption of the digital euro, political and legal risks as well as fair division of costs had to be thoroughly analyzed.
Committee chair Liisa Pakosta (Eesti 200) found that the digital euro initiative is required, and also meets the expectations of younger people for a modern payment instrument, equating its planned adoption with the switch from coinage made of precious metals, giving an intrinsic value, to the use of other metals, and thus the backing of a coin’s value by means.
She also said that “in the current complicated security situation, the adoption of the digital euro is important for the people of Estonia in preparing for crises,” adding that cash “is not safe in every situation while ATMs do not function during power cuts.
“The digital euro can be transferred from a person’s bank account to the digital euro app on their phone, like storing cash, and it can be used offline, or when there is no internet or card payments in shops are not working,” Pakosta added.
More thorough preparation is essential, but we as the national parliament gave a mandate to proceed with the developing of the digital euro, she went on, pointing out the necessity of properly analyzing its impact on banks, financial stability and consumer rights.
Committee member Aleksei Jevgrafov said the digital euro will make people’s life simpler. “It is inconvenient for the consumer that different e-shops require using all kinds of different payment services, from Google Pay to Paypal and Revolut. The digital euro will solve this problem because digital euro account can be used instead of different wallets and the customer will not be asked a service charge for that,” he said.
“It is also very welcome that there will be no need to go looking for cash when card payments do not function.”
The Bank of Estonia (Eesti Pank) will have an obligation to provide an essential service once the digital euro is adopted, the committee noted while the use of the new payment instrument will be mandatory for banks and free of charge for consumers, the committee said.
Limits will also be put in place on transaction sizes as a way of curbing money laundering and the financing of terrorism, the committee said, while a balance will be sought between safety and privacy when setting the rules.
The adoption of the digital euro is scheduled to take place between 2027 and 2030, and while it will initially only be rolled out within the eurozone, in the longer term its use may also be viable further afield.
Some bankers and regulators have expressed fears that the digital euro will take deposits away from the commercial sector, and some academics, the EU’s privacy watchdog and consumer groups have also expressed concerns.
Non-eurozone EU nation Sweden is among those sovereign nations to have rolled out pilot projects of its national currency.
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