The president of the European Central Bank and the institution warned that the digital Euro is approaching its preparation stage.
The “digital Euro” is an increasingly latent reality and the European Union is not stopping its development. The “preparation stage” will begin on November 1, according to the Governing Council of the European Central Bank, and will last two years.
According to the statement, this stage “Will involve finalizing the digital euro regulation and selecting providers that can develop a digital euro platform and infrastructure.” The challenges underlying the development of this new platform and digital currency are just yet to be discovered.
Although the European Union has studied the initiative for at least two years, many variables have not been discovered. How willing will citizens be? Is it economically viable? Below, answers to these questions will be provided.
The Digital Euro is not a cryptocurrency, neither is it a crypto asset (cryptocurrencies), nor is it bank money. The new EU currency would be part of “pure money” or the monetary base, since it would be a creation of the European Central Bank; It would be like cash: public, pure and created and stored in the ECB.
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At this stage, tests will be included that will ensure the security and privacy of users. On the other hand, the organization assures that they hope to be able to comply with the regulations and requirements of the Eurosystem without neglecting the section pertaining to the user.
In a publication, the European Central Bank assured that it seeks to venture into privacy, financial inclusion and reduce its environmental footprint, implementing much more efficient technologies for the functioning of the European financial system.
However, there is a condition that could make society or companies uncomfortable. And the ECB seeks to control the ledger of the chain that emerges after the creation of the digital euro. This means that, in the first instance, it will have to record its own liabilities in digital euros in the books that it will control, opening debates on the transparency of the digital Euro.
The president of the European Central Bank, Christine Lagarde, clarified the following in a note issued by the institution: “We conceive a digital Euro as a digital form of cash that can be used for all digital payments, free of charge and that meets the most “high privacy standards.”
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Completing in October, the previous phase of the project demonstrated development feasibility and high likelihood of successful implementation. On the other hand, the authorities clarified, it would benefit the market with new features.
A digital euro should be used primarily as a means of payment and not as an instrument for financial investments. The digital euro must be a public good that benefits the economy and society as a whole.
Furthermore, payments in Europe must be supported by a competitive and innovative market that responds to consumer needs while preserving European sovereignty.
The hopes may be just that, hopes for a digital currency that will reduce the environmental impact and increase the speed of the financial system. In Lagarde’s words, “only after the legislative act is adopted” will a decision be made, which could be to continue or discard the project altogether.
By Leonardo Pérez
