The European Central Bank Plans for Digital Euro
The European Central Bank (ECB) has announced its intention to enter the “preparation phase” for the digital euro project after conducting a two-year investigation. Starting on November 1, the ECB will lay the foundation for a potential digital euro issuance, emphasizing that the issuance of a central bank digital currency (CBDC) is not yet confirmed. The announcement follows the release of a report outlining the design and distribution of a digital euro.
Two-Year Preparation Phase
The preparation phase will span two years and will focus on finalizing regulations for the digital currency and selecting potential issuers. During this period, testing and experimentation will be conducted based on user feedback and compliance with central bank requirements. The Governing Council of the ECB will make a decision on whether to proceed with issuing a digital euro after the completion of the European Union’s legislative process.
European Commission’s Legislative Plan
In June, the European Commission proposed a legislative plan to enable users to access the CBDC through their banks. Fabio Panetta, an executive board member of the ECB, aims to make a digital euro available alongside cash, incorporating similar privacy features. However, ECB President Christine Lagarde faced criticism in the crypto space for suggesting that a digital euro could be used to control user payments in a prank video. The rollout of any digital euro is expected to draw attention from regulators and policymakers ahead of the European Parliament election in June 2024.
Hot Take: ECB Prepares for Digital Euro Launch
The European Central Bank has taken significant steps towards launching a digital euro by entering the preparation phase after conducting extensive research. This move signals the ECB’s commitment to exploring the potential issuance of a central bank digital currency. Over the next two years, the ECB will focus on finalizing regulations and selecting issuers, while also incorporating user feedback and complying with central bank requirements. While the decision to issue a digital euro will be made after the completion of the legislative process, this development underscores the growing interest in digital currencies and their potential impact on the financial landscape.
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