Digital Euro: When the Launch?
Against the backdrop of Russia’s latest effort to launch the digital ruble, let’s find out how another major currency, the digital euro, is doing.
It’s Central Bank Digital Currency (CBDC) time.
A recent survey by the Bank for International Settlements showed that 93% of central banks are already researching CBDCs. By 2030, the number of CBDCs in circulation will have potentially reached 24 CBDCs.
With Russian President Vladimir Putin, wanted by the International Criminal Court for war crimes in Ukraine, signing the digital ruble bill into law recently, let’s examine where the digital euro stands.
The digital euro in a nutshell
For the uninitiated, the digital euro is an electronic means of payment created for the eurozone area, encompassing 20 out of the 27 European Union member states.
According to the official website, this payment type would be “secure and user-friendly, like cash is today.”
“As central bank money issued by the ECB, it would be different from “private money”, but you could also use a card or a phone app to pay with digital euro,” the site reads.
The authors acknowledge how we pay is undergoing a fundamental change, and central banks have a key role in this process.
“European payments must be supported by a competitive and innovative market capable of meeting consumer demands while preserving European sovereignty,” the ECB argues while also subtly touching upon the usage of crypto.
Particularly, they say that crypto is not backed or managed by any central institution, and thus you have no guarantee that you will be able to exchange it for cash when you need to.
Many doubts harbored
The investigation phase began in July 2021. Since then, several stages have been completed, with some controversies taking place too. In late June, Slovakia's Parliament ratified a constitutional amendment, reinforcing the right to transact with physical euros for goods and services within the nation's borders.
There is also an air of general doubt about whether it is necessary to implement the digital euro in the eurozone at all, with lawmakers, including ECB representatives, harboring certain doubts.
To that end, Member of the Executive Board of the European Central Bank (ECB) Fabio Panetta admitted in June that the project to create a digital euro could be halted at any moment due to an array of concerns.
The private sector is likewise skeptical. In April, Jerome Grivet, deputy CEO of French bank Crédit Agricole, stated “Central bank digital money could threaten the traditional banks’ business model by competing with their collection activity and disrupting their financing capacity.”
So, when is the launch?
It doesn’t seem like the launch of digital euro is going to happen anywhere soon, as per its tentative timeline, which is also subject to change.
The timeline, which has a detailed overview of what is being done at each step, says that in autumn 2023, the Governing Council will take a decision to launch the next phase.
Accordingly, the project is still very much in the development phase and will likely remain so in the near future.
Digital euro development timeline. Source: ECB’s site.
Advocacy for its creation, however, is still robust, with the already mentioned Fabio Panetta and Executive Vice President of the European Commission Valdis Dombrovskis recently arguing why Europe needs a digital euro.
Previously, GNCrypto explained whether the digital euro will protect user privacy.
