- Moving ahead in the same story, on October 2, ECB released a ‘Report on a Digital Euro’
- ECB aims to develop a minimum viable product and the High-Level Task Force on CBDC is assigned to coordinate with the experiment for effective use of the Eurosystem’s resources
- ECB in their report stated mid-2020 as the time frame for deciding the future of the digital Euro
Digital currencies have been the talk of the town for long now countries like China, Japan and some private entities like Libra have moved far ahead in the process of its development. Just last month, Christine Lagarde, European Central Bank’s (ECB) Chief commented that when and if Europe will develop its digital currency, it will complement the current Euro and replace it completely.
Moving ahead in the same story, on October 2, ECB released a ‘Report on a Digital Euro’ examining the issuance of CBDC from the viewpoint of the Eurosystem. The report mentions that Digital Euro will be developed as a central bank’s liability and will be used by citizens and business for the retail payments.
Digital Euro Development Timeline
ECB aims to develop a minimum viable product and the High-Level Task Force on CBDC is assigned to coordinate with the experiment for effective use of the Eurosystem’s resources. ECB in their report stated mid-2020 as the time frame for deciding the future of the Digital Euro. During this time frame, the investigation phase for the digital asset will also begin.
The legal considerations, regulatory framework, various implications of the design features and most importantly the developed Digital Euro shall be applicable with the EU legislation shall be addressed. Future end-users, potential intermediaries, public authorities, financial authorities will also be kept in the development loop and no decision will be issued without pre-empting the above.
Fabio Panetta of ECB Board on Friday commented that ECB shall be completely prepared for the issuance of the digital currency and its development should have begun already. Once developed, the digital euros will function similar to fiat and will give the holder a direct claim on the central bank. This will make them safer to a greatto great extent than any other form of deposits. Features of transferring of Digital Euro via online methods, Bluetooth or even pre-paid cards will also exist.
Few potential concerns that ECB needs to overcome are that CBDCare CBDC might completely replace the traditional deposit system leading to crowding the private solutions and hollowing out the country’s commercial banks. Countries may not be open vocal but a race to develop digital currency is ongoing, and regular setbacks are part of it. From Libra’s Chief Engineer leaving the project ahead of the launch to Japan speeding up their process with research teams ( add names), and China already testing their official digital currency; everyone is moving at their face towards the CBDC.
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