The European Central Bank is beginning to explore a digital version of the euro and is starting public consultations on the implementation of this technology. Bloomberg reports.
“It is our responsibility to build trust in money,” the head of the ECB Christine Lagarde said after the bank published its research on the advantages and disadvantages of potentially introducing digital currency. “What this means is making sure the European currency meets the challenges of the digital age. We must be prepared to introduce the digital euro.”
The consultations and experiments will begin on 12 October and will be conducted in parallel. The ECB said it will make the final decision on the start of the digital euro by mid-2021.
The central bank digital currency (also known as CBDC in short) will allow eurozone residents to place deposits directly with the ECB. These residents will be commercial lenders, governments, and national central banks.
The ECB report urges to consider whether the digital euro should be made available to citizens, households, and private firms directly or through intermediaries, and if the digital euro should be limited to individual users.
The digital euro “will become a commitment that central banks – much like the case with the ECB, must really fulfill,” ECB Vice President Luis de Guindos highlighted.
CBDCs are digital versions of the currency available either directly to customers or through banks. They are based on blockchain technology and aim to improve access to means of payment in countries where the use of cash is declining, as well as to facilitate quicker and more available cross-border payments.
As it was reported on the web page of the European Union Intellectual Property Office, the ECB applied for a trademark of the “digital euro” last week. An ECB spokesman confirmed this information.
Central banks all around the globe are exploring the possibility of digital versions of their currencies. The People’s Bank of China will most certainly be the first big national central bank to release a CBDC of its currency. Meanwhile, the central banks of the USA and the UK are at the stage of discussing the possibility of using digital currencies but have not yet begun concrete action.
