The European Central Bank (ECB) has announced a significant stride in developing a digital euro central bank digital currency (CBDC). It is now advancing to the preparation phase of the project after a two-year investigation.
The ECB envisions a universally accessible digital currency, distributed by supervised intermediaries like banks, designed to offer the highest level of privacy and instant settlement of payments.
Digital Euro CBDC Project Pushes Forward
According to a report published by the ECB, the digital euro will be designed as a digital form of cash, usable for all types of digital transactions, thereby filling a gap in the digital payment sector.
“We need to prepare our currency for the future,” said Christine Lagarde, President of the ECB. She added:
“We envisage a digital euro as a digital form of cash that can be used for all digital payments, free of charge, and that meets the highest privacy standards.”
The next phase of the digital euro project, the preparation phase, is set to start on November 1, 2023, and will initially last two years. It will involve finalizing the digital euro rulebook while selecting providers that could develop a digital euro platform and infrastructure.
Read more: Digital Rupee (e-Rupee): A Comprehensive Guide to India’s CBDC
Exploring the Risks
However, the EU’s financial services chief, Mairead McGuinness, has called for a thorough examination of the digital euro proposal.
At a September conference, McGuinness emphasized not to rush the decision before the June 2024 elections.
She stated:
“The Governing Council will decide whether to move to the next phase of the project. But again, let me be very clear: a possible decision by the Governing Council to issue a digital euro is not on the table now, and would only be taken after the legislation is adopted.”
The digital euro project reflects the broader trend of CBDC adoption worldwide. Countries like Ireland, Spain, France, and Italy are also actively exploring digital euro prototypes.
The ECB and European institutions hope to continue working closely to determine the digital euro’s optimal design, ensuring it aligns with people’s needs and preferences.
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