• Sat. Jul 20th, 2024

Europeans Must Accept Digital Euro For It To Succeed – ECB

Jul 15, 2022

The ECB (European Central Bank) believes a digital Euro has some hurdles to surpass to be successful. First, it has to gain popular acceptance among Europeans. 

Also, it would have to meet their basic requirements and be suitable for payment. On July 13th, Christine Lagarde and Fabio Panetta wrote a blog post. 

Design Specifications Of The Digital Euro Still Unknown 

In the blog post, the ECB described its primary goals for the digital Euro. The post established several objectives for a virtual version of the EU’s single currency.

“The digital Euro can only succeed if it becomes integrated into Europeans’ daily lives. That means Europeans must be able to use it regularly. When compared to the current solutions, it must offer speed and value,” the statement noted.

According to Panetta and Lagarde, it is too early to settle on the specifications of the design. They believe the bank needs more time to work on the CBDC (Central Bank Digital Currency).

However, the bank estimates it will finish the project’s investigation phase in the fall of 2023. The ECB first initiated the Digital Euro Project in June 2021.

In October 2021, it started a two-year investigation phase on a retail CBDC. Since then, the EC (European Commission) has declared that it will adopt a digital version of the Euro bill in 2023.

The Digital Euro Would Be A Form Of Payment 

Besides, the EC is the EU’s executive arm in charge of drafting new legislation. According to Panetta and Lagarde, the digital Euro is intended to be a form of payment. It is not a method of investment.

Otherwise, several commercial bank deposits would be transferred to the central bank. This action would make it harder for banks to lend money to businesses and individuals and businesses.

Moreover, it might cause conflicts in the financial system during periods of financial hardship. Hence, the CBDC cannot be used for investment purposes. 

“The introduction of a digital Euro would guarantee that people continue to have faith in the Euro. This is because it is the currency that underpins their digital payments. If geopolitical tensions arises, the digital Euro would safeguard the monetary sovereignty of European payments,” the article stated.

Meanwhile, there have been no specifications on the design elements of the digital Euro. However, they have been reports about its objectives and uses.

The authorities stated that a digital Euro must first answer to the interests of its users. This is because people emphasize ease of use, wide acceptance, consumer protection, quick speed, affordable costs, and security.

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