The European Union are set to introduce new rules in the next four years that could introduce a single currency market that would make cross-border payments easier according to documents from a leak report.
European Union Looking to Create a Legal Framework for Cashless Ecosystem
According to Reuters, the two documents quoted from the leaked report represents a draft law that would clarify existing rules and develop new ones to fix current loopholes.
This process is expected to occur within the next four years as the EU looks to shift more towards a cashless system.
Countries in the EU still has a higher percentage of cash transactions with over 70%
despite being one of the most developed regions in the world.
This trend is what the regional body is looking to reduce with the development of an instant payment cashless ecosystem.
The coronavirus pandemic has also accelerated calls for the need for cashless payments with the lockdown imposed across the world limiting cash-cash transactions.
The EU wants to ensure that the process of sharing data is facilitated greatly within the financial sector.
Also checks are expected to be made for anti-money laundering and identity theft, leasing to ease for new customers to begin using financial services.
Digital Regional Coin on the Agenda
One area that has sparked controversies is calls for a universal regional digital coin. The announcement of Facebook Libra and the experiment on stablecoins by several countries has led to attention towards a centralized coin controlled by the EU.
There are currently researches by different European governments on a digital Euro and this was also suggested in the leaked report with individual countries expected to implement crypto coins via their Apex banks.
The document also referred to the advantages of instant payments over traditional credit transfers and explored the search for alternatives to payment processing giants like MasterCard and Visa.
The European Union will also take a look at the impact of charges imposed on consumers for instant payment with plans to cap it at a level below regular credit transfers.
Instant payment systems are expected to be the norm by the end of 2022 with full digitization implemented by 2024.
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