The European Central Bank (“ECB”) has announced that starting from July 2021 it will be launching a digital euro project. The project is still in its infancy, and its scope covers citizens within the euro area and having the objective to maintain access to a simple, universally accepted, safe, and trusted means of payment. A digital euro would also mean independence from other digital means of payment, having their control outside the euro area, which could undermine financial stability and monetary sovereignty.
“A digital euro would be a fast, easy and secure instrument for… daily payments. It would support the digitilisation of the European economy and actively encourage innovation in retail payments”.
The potential digital euro would be an electronic form of money issued by the Eurosystem, which would be a system maintained by the ECB and the national banks of Member States. Important to note is that the digital euro will not replace cash, but rather complement it. The digital euro would be managed by the ECB, which entity is the custodian of the euro.
As of October 2021, the ECB will be starting an investigation which is projected to last for two years. This investigation shall delve onto how the digital Euro will operate, how it could be designed, how it will be distributed to merchants and citizens, its possible impacts on the market, and the changes to European legislation that might be needed. Based on the results of the investigation, the ECB will then decide whether or not to start developing the digital euro, all the while working closely with banks and companies throughout the process. From experimental works done so far, there seems to be no major technological restrictions in issuing a digital euro.
A digital euro will comprise accessibility, robustness, safety, efficiency, privacy, and compliance with the law, aiming to facilitate and enhance the European free market economy. When presenting the report on the digital euro, Fabio Panetta declared that, “the digital euro would be a digital symbol of progress and integration in Europe”. The digital euro would introduce a new and secure payment solution, to conform with consumer demand and the rising of the digital era.
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