The European Central Bank (ECB) is making headways into the process of issuing a Digital Euro, a digital currency for the continent. The bank released a report by a high-level task force working on CBDCs (Central Bank Digital Currencies), detailing its progress to date.
The bank, which referred to European Financial Systems as ‘Eurosystem’, has responded positively to the digital currency and said that the development is imminent. It even hinted that the research phase of the Digital Euro project might start in 2021.
Digital Euro along with traditional currency
The ECB plans to work on all problems that may arise from issuing digital currency and wants to introduce it alongside the already existing fiat money. With more and more consumers using electronic media to make payments, it is clear that there is a need for a regulated method of digital payment. The solution is the Digita Euro.
The ECB clarified in the report that the Digital Euro would be a mode of payments, a currency. This clarification ended the debate of the nature of the Digital Euro – whether or not it would be treated as an asset.
Necessity of a digital Euro
The Existence of a digital means of payment would provide Europeans with more security than before. It would also be Europe’s proud beacon of constant innovation, as it provides an alternative to foreign payment providers for fast and efficient payments in Europe and beyond.
The ECB laid particular guidelines for this project, stating that the digital Euro would be available across the globe, must be eco-friendly, and cost-effective. The bank also said that the digital currency must be available “through standard interoperable front-end solutions throughout the entire euro area and be interoperable with private payment solutions”.
The Chair of the ECB’s CBDC task force, which provided the report, Fabio Panetta, said the ECB was working with national central banks to resolve the issues around a central bank digital currency.
It is crucial that the ECB does transparent and thorough research before starting the process of introducing digital currency. The research process is due to start in 2021.