The European Central Bank (ECB) has announced the advancement of its digital euro initiative to the subsequent stage, referred to as the “preparation phase,” following a two-year investigatory period. This phase is slated to involve the completion of a rulebook for the digital euro and the selection of entities that could be responsible for crafting the requisite platform and underlying infrastructure for the digital currency.
Digital Euro Advances to Preparation Stage
The Governing Council of the European Central Bank issued a statement on Wednesday, revealing its decision to progress to the next stage in the digital euro project—specifically the preparation phase. This move comes after the conclusion of an extensive investigation into Central Bank Digital Currencies (CBDCs) initiated by the Eurosystem in October 2021. The purpose of the investigation was to scrutinize possible structural and distribution models for a digital euro. A comprehensive report outlining the findings from this investigatory stage was also published by the ECB on Wednesday.
Details on the Preparation Phase
The ECB has outlined that the preparation phase will officially commence on November 1, 2023, and is initially expected to last for a period of two years. During this time, efforts will be concentrated on completing the regulatory framework for the digital euro and identifying potential providers who could create the necessary digital platform and infrastructure.
After the completion of this two-year period, the Governing Council will then determine whether to advance to the succeeding stage of preparations, ultimately leading to the potential formal issuance and implementation of a digital euro.
ECB’s Vision for the Digital Euro
The ECB elaborated on its vision for the digital euro, stating that it aims for the digital currency to be freely accessible for basic usage by individuals. The currency would be distributed through regulated intermediaries such as banking institutions, making it widely available to both citizens and enterprises.
Additionally, the ECB emphasized that data protection would be a cornerstone in the digital euro’s design. The Eurosystem would not have the capability to access users’ private data or associate payment details with individual users. A cash-equivalent level of privacy for offline transactions is also among the objectives for the digital euro.
Fabio Panetta, an Executive Board Member of the ECB and the Chair of the High-Level Task Force on a digital euro, remarked that the digital currency would bolster the efficacy of European payment systems and strengthen Europe’s strategic independence.
Comments from ECB President Christine Lagarde
Christine Lagarde, President of the ECB, expressed the need to modernize the euro for the evolving digital landscape. She envisioned the digital euro as a digital counterpart to physical cash, usable for all forms of digital transactions without incurring fees, while adhering to the most stringent privacy norms. Lagarde reassured that physical cash would continue to remain in circulation, ensuring that no segments of the population are marginalized.
What are your thoughts on the advancement of the digital euro to its next preparatory stage? Please share your perspectives in the comments section below.
Frequently Asked Questions (FAQs) about Digital Euro
What phase has the digital euro project currently entered?
The digital euro project has entered the “preparation phase.” During this stage, the European Central Bank (ECB) will finalize the digital euro rulebook and select providers for developing the necessary digital platform and infrastructure.
What was the purpose of the ECB’s two-year investigation?
The two-year investigation aimed to scrutinize possible design and distribution models for a digital euro. The investigation was initiated by the Eurosystem in October 2021, and its findings were published in a comprehensive report by the ECB.
How long is the preparation phase expected to last?
The preparation phase is initially slated to last for a period of two years, starting from November 1, 2023.
What are the key features of the digital euro as outlined by the ECB?
The digital euro aims to be free for basic use by individuals and is planned to be widely accessible via regulated intermediaries like banks. A significant focus will be placed on data protection and privacy, aiming to achieve a cash-like level of privacy for offline transactions.
Who will be responsible for developing the digital euro’s platform and infrastructure?
The ECB will identify and select potential providers who could be responsible for creating the digital platform and infrastructure needed for the digital euro.
What are the comments from Fabio Panetta and Christine Lagarde regarding the digital euro?
Fabio Panetta, an Executive Board Member of the ECB, remarked that the digital euro would increase the efficiency of European payments and contribute to Europe’s strategic autonomy. Christine Lagarde, the President of the ECB, emphasized the need for a digital form of cash that can be used for all digital payments, free of charge, and that meets the highest privacy standards.
Will the digital euro replace physical cash?
No, the digital euro is envisioned to coexist alongside physical cash. Christine Lagarde, the President of the ECB, reassured that physical cash would continue to be available, ensuring that no one is left behind.
What measures are being taken to protect users’ data?
Data protection is emphasized as a priority for the digital euro. The Eurosystem would not have access to users’ personal data or be able to link payment information to individual users.
What happens after the two-year preparation phase?
After the two-year preparation phase is completed, the ECB’s Governing Council will decide whether to advance to the succeeding stage of preparations, which could ultimately lead to the formal issuance and roll-out of the digital euro.
The article invites readers to share their perspectives on the advancement of the digital euro in the comments section below the text.
More about Digital Euro
- European Central Bank Official Announcement on Digital Euro
- ECB’s Comprehensive Report on Digital Euro Investigation
- Central Bank Digital Currencies: An Overview
- Christine Lagarde’s Remarks on Digital Currencies
- Eurosystem Explained
- Data Protection and Financial Transactions
- Fabio Panetta’s High-Level Task Force on a Digital Euro