The government has approved in principle a European Commission proposal to begin preparations for the introduction of a digital euro, within the European Union eurozone.
Minister of Finance Mart Võrklaev (Reform) says that this would lead to the introduction of a new digital means of payment, co-existing with cash, which would enable both private individuals and businesses to make payment, at any time, and anywhere across the eurozone.
Võrklaev said: "The option to pay using the digital euro would be made available within online environments, at stores, points of sale and elsewhere. The service could be used, for example, via a smartphone app, even without an internet connection."
Of this latter facet, the minister said: "Offline use provides an opportunity to increase the reliability of digital payments in various crisis situations and also reduces the need for cash, which is one of its main benefits."
Evelyn Liivamägi, Deputy Secretary General for Financial and Tax Policy of the Ministry of Finance, said: "In principle, Estonia supports the concept of the digital euro; however, EU institutions must first thoroughly assess all the legal and economic implications and risks, particularly those related to money laundering and terrorism financing."
"Once the legal framework is in place, the final decision on issuance will be made by the central banks," Liivamägi added, via a finance ministry press release.
The finance ministry says a digital euro would primarily: Complement cash and private sector payment solutions, supports innovation and the digitalization of the EU economy, avoid risks associated with unregulated payment solutions, strengthen the international role played by the euro, along with the strategic autonomy of the EU, and would promote financial inclusion by increasing choice, competition and accessibility of digital payments.
The European Central Bank (ECB) has been analyzing aspects related to the digital euro for over two years, the ministry says, with the aim of moving forward to the preparation and testing phase.
Development of the digital euro is expected to last for around three years, while the ECB will be able to make a decision on the introduction of the digital means of payment once both the European Council and the European Parliament have adopted the required legal framework, the ministry says.
The ministry says that payments EU-wide are increasingly being made through digital channels and the use of cash continues to fall.
Additionally, in order to shore up the EU's economy, being ready for the introduction of a digital means of payment which would work in parallel with cash is also required, the ministry says.
The ECB took a further step last month towards launching a digital version of the euro that would let people in the 20 countries that share the single currency make electronic payments securely, and free of charge, Reuters reports.
However, the project has its fair share of critics, chiefly bankers and regulators who fear it will take deposits away from the commercial sector
Some academics, the EU's privacy watchdog and some consumer groups have also expressed concerns.
Some Caribbean countries and also Nigeria have already launched digital currencies, while China and Sweden are among those to have rolled out pilot projects of their national currencies.
Editor: Andrew Whyte