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The European Central Bank announces digital euro plans

Photo of: Joseph Stone
by Joseph Stone

The European Central Bank (ECB) has decided to move up a gear by launching a 24-month in-depth study on the creation of a central bank digital currency (CBD) in the eurozone. This could see the light of day within 5 years. This more offensive tone on a future digital euro is explained by the rallying of the Bundesbank and German banks to the project. This project comes at a time when Facebook is working on a digital currency and China has been working for a long time on the launch of an e-yuan.

It is finally a green light. After much hesitation, the European Central Bank (ECB) has decided to take the plunge by launching two years of work on the project to create a digital euro.

In the face of private digital currency initiatives, popularized by the thunderous declarations of Facebook, with its plan (amended a thousand times) to launch its own currency, renamed Diem, but also by China’s great ambitions for its e-yuan, the subject of a central bank digital currency (CBDC) is now clearly on the table of all the major central banks. It is also a concern of politicians.

The ECB’s decision to take the plunge marks a turning point in Europe, whereas the position of the various European central banks and banks was far from unanimous, even a few months ago, on the interest of a digital currency.

They explain:
“A digital euro would combine the efficiency of a digital payment instrument with the safety of central bank money.

It would help to deal with situations in which people no longer prefer cash, and it would avoid dependence on digital means of payment issued and controlled from outside the euro area, which might undermine financial stability and monetary sovereignty.

The protection of privacy would be a key priority so that the digital euro can help maintain trust in payments in the digital age.

They further explain that this digital euro would be fundamentally different from other cryptos: “People using a digital euro could have the same level of confidence as with cash since they would be both backed by a central bank.”

Thus, to protect privacy with a centralized e-euro, Fabio Panetta, a member of the ECB’s executive board, recently explained: any payment will be traceable after the fact “if the police wish to assess whether there has been any illicit activity.”

For more information: https://www.ecb.europa.eu/paym/digital_euro/html/index.en.html