ECB Advances to the Next Generation of the Digital Euro
Although it has not yet taken a final decision on releasing the digital euro, the Governing Council of the European Central Bank (ECB) recently declared that it was moving onto the next phase of the project, laying the groundwork for its prospective issue next month.
This central bank digital currency (CBDC) preparatory phase comes after two years of study into the currency’s form and distribution, and it’s intended to “lay foundations for a potential digital euro,” according to an ECB news release from October 18.
After the Eurosystem’s October 2021 commencement of a research phase into potential digital euro design and distribution options, “this decision has been reached.”
Based on the conclusions revealed in the summary report for the previous phase titled “A stocktake on the digital euro,” the statement states that moving to the next step involves “finalizing rulebook and selecting providers to develop platform and infrastructure” for the currency.
The second phase, called the preparation phase in the news release, is set to begin on 1 November 2023 “and will initially last two years,” during which time testing and experimentation will be conducted to establish a digital euro that satisfies the standards of the Eurosystem and the demands of its users.
Christine Lagarde, head of the European Central Bank, offered her thoughts on the matter. “Our currency has to be future-proofed. We see a digital Euro as a sort of digital currency that can be used for any digital payment, without cost, and with the strongest possible privacy protections. Physical currency would coexist with it, and nobody would be left out.”
Lagarde has previously defended the digital euro initiative, claiming the money “will not be completely anonymous as is the case with a banknote,” after certain members of the European Parliament raised worries over the effect on user data privacy, as reported by Finbold in September.
Lagarde imagined she was speaking to Ukrainian President Volodymyr Zelensky in a spoof interview back in March, and during that conversation, she conceded that “there will be control” after the introduction of the digital euro.