The European Union now appears to be accelerating the launch of a digital euro. The growing fear that cryptocurrencies will end up overtaking fiat money has led to shortening the previously planned deadlines and even next month we will have a public consultation focused on the uses of a digital euro.
The European Central Bank is already studying and experimenting with different models and variants of the digital euro, whose arrival, if approved among the members of the eurozone, would not arrive until at least 2025, but which will already have its first steps to reach next year with a firm project under the arm.
The bill will arrive in early 2023
The European Union is set to propose a digital euro bill in early 2023. The digital euro research phase was first announced in July 2021 and was revealed to last up to 24 months.
Reasons for the creation of a digital euro
Germany and France last year urged the European Central Bank to speed up the process, fearing the euro zone would be left behind. Other emerging countries and economies have already taken the first steps towards digitizing their currency. The People’s Bank of China began its journey towards a digital yuan in 2014. Meanwhile, the Indian Ministry of Finance has committed to having a virtual version of the rupee by the end of this year.
These terms will be shortened by the growing fear that national currencies will end up being overtaken by the growing popularity of cryptocurrencies. EU finance chief Mairead McGuinness revealed at the Afore Consulting fintech conference that “the aim is to present legislation in early 2023 and a specific legislative consultation in the coming weeks ”.
Steps towards the digital Euro
The digital euro is a digital currency issued by a central bank (Central Bank Digital Currency, CBDC for its acronym in English), which therefore has the property of being a form of money that is regulated by a state or by a union of states . This proposal seeks to solve the problem, especially of costs and infrastructure, which is the physical version of fiat money (coins and bills).
A digital euro would not replace cash, but would complement it. The Eurosystem will continue to ensure that euro banknotes and coins are accessible throughout the euro area.
Recreation of the digital euro token
This financial instrument is being seriously explored by central banks around the world. The European Union itself is already experimenting with different designs and systems for this digital euro, which should first be approved by all the governors of the eurozone and, if so, could be ready for broadcast in 2025.
In addition to the countries listed above, also others such as Jamaica, South Korea, and Malaysia are among the many countries that have announced digital currency plans. Governments are moving towards CBDCs because they are aware of the benefits of the technology, highlighting the ability of cryptocurrencies to improve payment systems, as European Central Bank President Christine Lagarde did, as well as related concerns. with stablecoins and cryptocurrencies.