.svg)
The European Commission’s proposal for a digital euro has been shelved after the leak last week, according to Brussels sources.
Payments insiders have been preparing for a mass drop of new EU regulatory proposals on June 28, including PSD3, the EU’s first Payment Services Regulation, an Open Finance framework, updates to the Late Payments Directive and the EU’s legislative proposal for the Digital Euro.
Rumours have now emerged that legislation intended to enable the digital euro launch will be delayed.
One source in Brussels told VIXIO that people began to assume it had been written off following the leak of the College of Commissioners meeting agenda, whereby the legislation had been pulled.
This is not the first time rumours have circulated about a delay. Previously, dates in March and May had been whispered in Brussels coffee houses but proposals failed to materialise.
This time, however, it feels more significant; much of the market has already seen the proposals for the digital euro legislation, following a leak of the texts that made its way around the payments industry last week.
It is not uncommon for legislation to leak in the weeks leading up to its announcement, with some theorising that Commission staffers leak documents themselves to make sure, as one source put, “there is nothing crazy”.
As it stands, the EU’s digital euro legislation that leaked last week advised that the European Central Bank (ECB), which as an investigatory phase concluding in October, should develop instruments to limit the use of the digital euro as a store of value, including holding limits.
In documents seen by VIXIO, merchant service charge or inter-payment service provider (PSP) fees are set to be regulated to ensure that they are oriented towards the relevant costs incurred by PSPs, including a reasonable profit margin.
The proposal also suggested that they should not be higher than those requested for the most efficient comparable means of payment.
And, with a view to ensuring an effective use of the digital euro as a legal tender means of payment, the Commission had said that the ECB should issue recommendations, but may also set a mandatory level of these fees or charges.
Further, the Commission advised that these fees and/or charges should not lead to excessive charges for merchants, while also providing sufficient compensation for the costs incurred by PSPs when distributing the digital euro.
The documents also considered the use of the digital euro in non-euro area member states. Here, the proposal advised that access should be possible, but that the member state would need to make a request and commit to a number of conditions.
Further, the ECB and the member state’s national central bank would need to enter into an arrangement that specifies the necessary implementing measures.
If this proposal survives, similar arrangements would also be possible for third countries.
Also in the documents were rules regarding data privacy, one of the sticking points for the EU’s approach to a digital euro.
This has often been a concern for politicians in the European Parliament and for consumers when surveyed.
Although, as one source wryly noted, consumers' concerns about privacy highlights how little knowledge there is about the data that private companies process on payment transactions.
In the legislation, the Commission suggested that personal data processing should build on the use of state-of-the-art security and privacy preserving measures, such as pseudonymisation or encryption, to ensure that data is not directly attributed to an identified digital euro user by the ECB and national central banks.
While none of what has been proposed by the Commission should come as a surprise, the legislation had still left the industry unconvinced.
Brussels insiders have spoken highly of the PSD3 and PSR, with one remarking they are a “piece of art”. Yet, in comparison, one source commented that the digital euro legislation was the “biggest overreach I have seen in my career”.
Another commented that they “would love to poll on LinkedIn how many people actually know the difference between central bank money and commercial bank money”.
