BRUSSELS, Belgium—Merchants in the eurozone could be required to accept a digital euro if it is deemed to be legal tender, according to a paper distributed to members of the Council of the European Union.
Giving the central bank digital currency (CBDC) the same status as banknotes and coins would mean the payments legally discharge obligations to pay, and with mandatory acceptance at full face value, the paper suggests, according to a report from Yahoo Finance.
Legal tender status “would imply a legal obligation for (certain) payees to accept payments in digital euro … thereby increasing its network effects, and potentially affecting its distribution,” the document states.
The paper also asks ministers "whether exemptions should be considered to ensure proportional application ... balancing the principles of contractual freedom and mandatory acceptance."
One Caveat
At a previous discussion in January, ministers said the digital euro shouldn’t be programmable, because giving the ability to limit how a given payment can be used by the recipient would impair money’s fungible status, Yahoo Finance reported.
The European Central Bank is set to formally decide whether to issue its currency in digital format in the fall.
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