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(32) |
An unrestricted use of digital euro as a store of value could endanger financial stability |
in the euro area, with adverse effects on credit provision to the economy by credit |
institutions. This may require that the European Central Bank, with a view to ensuring |
the stability of the financial system, and in line with the principle of proportionality, |
introduce limits on the digital euro’s use as a store of value. The policy tools that |
could be used for this purpose include, but would not be restricted to, quantitative |
limits to individual digital euro holdings and limits to conversion of other categories of |
funds to digital euro in a specified timeframe. When deciding on the parameters and |
use of the instruments referred to in paragraph 1, the European Central Bank should |
respect the principle of an open market economy with free competition, in accordance |
with Article 127(1) TFEU. |
(33) |
Limits should not be used to substitute for early intervention or other supervisory |
measures. Neither should such limits be imposed to address situations of individual |
credit institutions which competent resolution authorities or other relevant authorities |
would normally deal with by using tools and powers at their disposal, including |
suspensions of payment, moratoria, measures available under Directive 2013/36/EU, |
Directive 2014/59/EU or Regulation (EU) No 806/2014, or other similar measures |
which are aimed at restoring the viability, resolving the institution concerned or |
otherwise remedying the situation of financial distress. |
(34) |
Digital euro users should have the choice to use the digital euro either online or |
offline, or both, subject to the limits set respectively by the European Central Bank |
and by a Commission implementing act. The payment service providers should |
register and de-register the local storage devices for offline digital euro payment |
transactions of their customers. The payment service providers should only store the |
identifier of the local storage device used for offline digital euro for the duration of |
facilitating the provision of offline digital euro to their customers. The payment |
service providers should implement appropriate technical and organisational measures |
including state-of-the-art security and privacy-preserving measures to ensure that the |
identifier of the device of individual digital euro users cannot be used for other |
purposes other than for the purpose of the provision of offline digital euro. |
(35) |
The payment service providers should register and re-register the local storage devices |
for offline digital euro payment transactions of their customers. The payment service |
providers should only store the identifier of the local storage device used for offline |
digital euro for the duration of facilitating the provision of offline digital euro to their |
customers. The payment service providers should implement appropriate technical and |
organisational measures including state-of-the-art security and privacy-preserving |
measures to ensure that the identifier of the device of individual digital euro users |
cannot be compared with the information about the digital euro user in order to |
identify the data subject, except for the purpose of Article 37. |
(36) |
The digital euro should allow for a smooth payment experience. Any instruments that |
the European Central Bank might employ to limit the digital euro’s store of value |
function should take this objective into account. Automated mechanisms that link a |
digital euro payment account with a non-digital euro payment account should allow |
for an uninhibited payment functionality of the digital euro, by ensuring that |
transactions are successfully executed in the presence of individual digital euro |
holding limits that may become binding on the payer’s or payee’s side. In particular, |
digital euro users should be able to initiate a digital euro payment transaction even |
though the amount of their digital euro holdings is inferior to the amount of the |
transaction, by automatically mobilising funds from a non-digital euro payment |
account to complement the transaction amount (‘reverse waterfall functionality’). |
Conversely, digital euro users should be able to receive digital euro payment |
transactions even though the amount of the transaction exceeds the limit set on their |
digital euro holdings, by automatically transferring funds in excess of the limit to a |
non-digital euro payment account (‘waterfall functionality’). Such payment |
functionalities should be expressly authorized by digital euro users. Where digital euro |
payment account held by one payment service provider is linked with non-digital euro |
payment account held by another payment service provider, they should enter into an |
arrangement specifying their respective roles and responsibilities under data protection |
rules, as well as agree on the security measures necessary to ensure secure |
transmission of personal data between the two payment service providers. |
(37) |
While instruments employed by the European Central Bank to limit an excessive use |
of the digital euro as a store of value aim at safeguarding financial stability and |
financial intermediation, they may nonetheless impact on and interact with the |
European Central Bank’s monetary policy stance. Such instruments would therefore |
need to be applied uniformly across the euro area in order to ensure the use of the |
digital euro as a single currency and the singleness of the monetary policy. |
Furthermore, a uniform application would be necessary to ensure a level playing field |
for payment service providers in the European single market or avoid an overly |
complex enforcement of any instrument through payment service providers on the |
basis of digital euro users’ residency. Within the framework of this Regulation, the |
digital euro should not bear interest for the purposes of primarily using the digital euro |
as a means of payment while limiting its use as a store of value. |
(38) |
Limits to the use of the digital euro for digital euro users residing or established |
outside the euro area should not be more favourable than for digital euro users residing |
or established in the euro area, also to cater for monetary sovereignty and financial |
stability concerns both within and outside the euro area. |
(39) |
Any limits to the store of value function that the European Central Bank decided on |
should be binding on and implemented by the payment service providers distributing |
the digital euro. While natural or legal persons may have one or more digital euro |
payment accounts at the same payment service provider or at different payment |
service providers, they should be subject to an individual holding limit that a digital |
euro user may allocate across different payment services providers. Payment service |
providers may offer digital euro users the possibility to legally have a joint digital euro |
payment account. In this case, any holding limit applied to the joint digital euro |
payment account should be equal to the sum of the allocated holding limits of the |
digital euro users. Where a digital euro payment account is legally held by only one |
digital euro user, but can be technically accessed to and used by several persons, upon |
de facto or legal mandate given by the digital euro user, any holding limit applied to |
the digital euro payment account should remain equal to the holding limit defined for a |
digital euro payment account held by a single digital euro user, to avoid any |
circumvention of the holding limits. |
(40) |
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