The European Central Bank (ECB) has announced the progression of its digital Euro initiative to the so-called “preparation phase”, marking a significant step towards realizing a Central Bank Digital Currency (CBDC).
This decision comes after the culmination of a two-year investigation phase that delved into a digital Euro’s design and distribution mechanisms.
As per a Wednesday statement, the digital Euro, as envisioned by the ECB, aims to be a widely accessible form of digital cash tailored for use across the entire Euro area. The bank noted that it will be freely available for basic usage, both online and offline, ensuring a high level of privacy for users while allowing for instantaneous settlement in central bank money. This novel digital currency is designed to serve various purposes, including peer-to-peer transactions, point-of-sale payments, e-commerce, and government transactions.
The bank further noted that the preparation phase, commencing on November 1, 2023, will span two years and encompass several key tasks. Notably, it will involve the finalization of the digital Euro rulebook, the selection of providers responsible for developing the platform and infrastructure, and rigorous testing and experimentation to align with the Eurosystem’s requirements and user needs. Importantly, this phase will include active engagement with the public and stakeholders to gather feedback and insights.
However, it is crucial to clarify that the launch of the preparation phase is not a definitive decision to issue a digital Euro. As per the bank, the ultimate decision will only come after the European Union’s legislative process reaches its conclusion.
Following the launch, Christine Lagarde, President of the ECB, expressed the necessity of preparing the currency for the digital era. She however emphasized that the digital Euro is expected to coexist with physical cash, ensuring inclusivity for all individuals.
“Cash is here to stay. You will have all options; cash and digital cash.” Largade stated in a Thursday video.
That said, the said development comes on the backdrop of various concerns raised by the crypto community, particularly those related to privacy and security. In the past, a substantial portion of citizens expressed a preference for a combination of online and offline functionalities that prioritize privacy. Additionally, concerns about the security of devices used for storing digital Euros have been raised, necessitating robust measures to mitigate risks.
however, the bank emphasized that its monetary authority The Eurosystem, will not have access to users’ personal data or payment information, emphasizing the cash-like privacy of offline transactions.
