ECB’s two-year research program on central bank digital currencies has come to a close. The board is now ready to move forward with the next phase of its research.
The ECB Governing Council said on October 18 that it has agreed to continue forward with the digital euro project. The completion of a two-year inquiry phase preceded the entry into the preparation phase for a future European CBDC. The preparation stage will begin on November 1 and will last for the first two years. It will entail the completion of the digital euro regulation, the selection of technology vendors, and testing.
Digital Euro in Two Years?
Following the completion of the preparation phase, which is scheduled for the end of 2025, the ECB will determine whether to proceed with the actual issuance of a CBDC. This decision would be made only when the EU legislative process was completed, which would most likely be the following year. “The launch of the preparation phase is not a decision on whether to issue a digital euro,” the statement said.
The EU’s legislative bodies – the EU Parliament and the Council of the EU (member states) – will ultimately decide whether or not to launch a digital euro, according to Circle’s Director of EU Strategy and Policy, Patrick Hansen, who added: “A legislative process is currently underway, and discussions on the EU Commission proposal have already begun, but it will probably take some time (until after the EU elections in June 2024) before the EU institutions will vote on the proposal.”
The suggested digital euro would function as a digital kind of cash, enabling private offline payments. According to the release, it would be widely available, free for basic use, and adhere to the greatest privacy requirements.
According to Christine Lagarde, who is president of the ECB, we need to prepare our currency for the future. It will coexist alongside physical cash, which will always be available. People without bank accounts could use government-issued cards, such as those issued by the post office.
CBDC Latest Outlook
The Bank for International Settlements (BIS) and the central banks of France, Singapore, and Switzerland announced earlier this month the successful completion of Project Mariana, a new CBDC programme. According to the Atlantic Council CBDC tracker, 11 countries have deployed a CBDC, the most of which are in the Caribbean, with the exception being Nigeria. Nonetheless, certain US senators are adamantly opposed to a CBDC, alleging that it will undermine financial privacy and allow governmental surveillance.