Central Bank Digital Currency and the Treaty Mandate of the European Central Bank

Is the EU constitutional framework proof for the issuance of euro banknotes, coins, and digital euros alike? This Chapter focuses on the legal mandate of the ECB at primary level, namely following the EU Treaties, for issuing a Central Bank Digital Currency (CBDC) that has been named ‘digital euro’ in the EU context. The currency is a vehicle for public money, whose format can change to deliver appropriately the tasks and functions of the central bank. Therefore, I argue that the right to issue euro banknotes can encompass the right to determine the format or medium of ‘euro banknotes’, which is, in that case transposing to the digital reality of the economy. The ECB Governing Council stressed the objective to ensure an openly accessible, electronic means of payment, for retail, which I coin as ‘universal and inclusive’. This means not only to ensure the wide availability and use of the digital euro, but also to consider the complementary phases within the digital euro ‘scheme’, namely, its issuance, distribution, and settlement. I concur with the approach of the cumulation of legal bases which enables, legally and constitutionally, the entire digital euro scheme – now put forward by the European Commission under the ‘Single Currency Package’.The Chapter is structured as follows: Section 2 lays down the EU constitutional and primary law analysis, by focusing on the Treaty mandate of the ECB for issuing a CBDC. Section 3 discusses the importance of legal tender for both the euro coins/banknotes and the future CBDC – despite the limits of this concept across the euro area Member States. Section 4 engages with some broader constitutional challenges in issuing CBDCs and discusses some other legal issues that can significantly influence the digital euro scheme, including at its operational level. Section 5 concludes the Chapter