The European Central Bank (ECB) is making progress in developing a digital euro central bank digital currency (CBDC). After a two-year investigation, the ECB is now moving into the preparation phase of the project.
The goal of the ECB is to create a digital currency that is universally accessible and distributed through supervised intermediaries like banks. This digital euro will prioritize privacy and enable instant settlement of payments.
Digital Euro CBDC Project Moves Forward
The ECB’s report states that the digital euro will serve as a digital form of cash, usable for all types of digital transactions. It aims to bridge the gap in the digital payment sector.
Christine Lagarde, President of the ECB, emphasized the need to prepare their currency for the future and envisions the digital euro as a free-of-charge digital payment method that meets high privacy standards.
The next phase of the project, the preparation phase, will begin on November 1, 2023, and last for two years. During this phase, the digital euro rulebook will be finalized, and providers capable of developing a digital euro platform and infrastructure will be selected.
Exploring the Risks
While progress is being made, Mairead McGuinness, the EU’s financial services chief, has called for a thorough examination of the digital euro proposal. She urges caution and advises against rushing the decision before the June 2024 elections.
McGuinness clarifies that a decision on issuing a digital euro will only be made after legislation is adopted and emphasizes that it is not currently on the table.
This project aligns with the global trend of CBDC adoption. Countries like Ireland, Spain, France, and Italy are actively exploring prototypes for their own digital euros.
The ECB and European institutions will continue to work closely together to determine the optimal design of the digital euro, ensuring it meets the needs and preferences of the people.
Hot Take: ECB Advances Digital Euro Project Into ‘Preparation Phase’ After 2-Year Investigation
The European Central Bank (ECB) is making significant progress in developing a digital euro central bank digital currency (CBDC). With the aim of creating a universally accessible digital currency, the ECB envisions a digital euro that offers high privacy standards and instant settlement of payments. The project has now entered the preparation phase, which will involve finalizing the rulebook and selecting providers for the digital euro platform and infrastructure. However, caution is advised by the EU’s financial services chief, who urges thorough examination and emphasizes that a decision on issuing a digital euro will only be made after legislation is adopted. This project aligns with the global trend of CBDC adoption, and the ECB will work closely with European institutions to ensure the digital euro meets people’s needs.
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