The European Central Bank, following the investigation phase of the digital euro, will try to go forward with the digital currency project.
The preparation phase of the digital euro has finally commenced. The governing council of the European Central Bank announced the development after its meeting recently. The investigation phase for the digital currency started back in October 2021. Following two years of findings, a report was also released based on the outcomes of the digital currency project.
On November 1, the European Central Bank will begin preparations and lay the foundation of the digital euro. It may be issued later, but the ECB will not shelve plans regarding it. The preparation phase, as the ECB calls the next stage, will deal with testing and experimentation of the project. It will last another two years and include various aspects of the digital euro.
Firstly, it will decide the central bank digital currency issuers who would have the required infrastructure. The ECB will also finalize the rulebooks for the digital euro, along with developing a currency with the current requirements. Public consultations with the ECB will continue during this phase. Eventually, the governing council will decide the subsequent decisions regarding the rollout after two years.
“We envisage a digital euro as a digital form of cash that can be used for all digital payments, free of charge, and that meets the highest privacy standards. It would coexist alongside physical cash, which will always be available, leaving no one behind,” said the President of the ECB, Christine Lagarde.
The European CBDC will provide a common platform for intermediaries to create services for users across the continent. The move will improve efficiency and innovation while reducing costs. According to the ECB, the digital euro would also contribute to Europe’s strategic autonomy.
The ECB also wrote about the detailed distribution strategy for the digital currency. Even those without bank accounts would be able to pay with the CBDC using cards issued by public bodies. Users would also be able exchange the European CBDC for cash and vice versa.
Ultimately, the European CBDC would likely be free for users, and the Eurosystem would bear its own cost. Intermediaries and merchants may have a compensation model between them. The system will generate incentives for intermediaries to help them distribute the CBDC.
Ultimately, the press release said the project would closely focus on transparency. It would also maintain constant cooperation with all stakeholders of the project. EU legislators would also have a key role to play in its development, said the ECB. The well-structured process to develop the digital euro could definitely show results. A pan-European payment solution powered by the CBDC is helpful for all stakeholders.
The project may also broadly promote awareness of the benefits of crypto and its underlying technology.