The European Central Bank (ECB) disclosed on its official website that it will finally start exploring the possibility of launching its own digital euro.
The ECB has been considering issuing a central bank digital currency for months now. The first phase of the project involves a broad investigation, which is going to last 24 months. After a preliminary experimentation period where no obstacles were encountered, the European Central Bank wants to create in the future a digital euro based on user’s preferences. It also expects businesses and merchants to make their own technical suggestions.
“It has been nine months since we published our report on a digital euro. In that time, we have carried out further analysis, sought input from citizens and professionals, and conducted some experiments with encouraging results. All of this has led us to decide to move up a gear and start the digital euro project. Our work aims to ensure that in the digital age citizens and firms continue to have access to the safest form of money, central bank money”.Christine Lagarde, ECB President
The period of 24 months will focus on issues such as the design of a digital euro and its distribution. The European central bank digital currency has to meet every citizen’s needs, but at the same time, it has to be safe and prevent illegitimate activities. If the investigating phase turns out to be successful, it will not have any negative impact on Europe’s financial stability.
A CBDB will not replace cash, but it will complement it.
“We will engage with the European Parliament and other European decision-makers and inform them regularly about our findings. Citizens, merchants, and the payments industry will also be involved.”Fabio Panetta, Chair of the High-Level Task Force on a digital euro
Nations all over the world have been exploring the subject. The Bank of England has taken a similar step in April. Creating a Taskforce to explore the issuing of a digital pound. Asia is one step ahead when it comes to CBDCs.
Banks in Cambodia, China, or Thailand are already testing them. The Bank of Japan is part of seven major central banks that are exploring the ecosystem of CBDCs. Through several trials. The digital yen will be compatible with them partly to counter the rapid progress of China towards issuing a digital yuan.