October 19, 2023

European Central Bank Takes Steps Towards Digital Euro Implementation

The European Central Bank (ECB) Governing Council recently unveiled its move to the next phase of the digital euro project. This step involves laying the groundwork for the potential issuance of a digital euro in the coming months, though a final decision has not been made yet.

More precisely, this phase of preparation for the central bank digital currency (CBDC) comes after a two-year investigation into its design and distribution. The ECB aims to establish the fundamental elements required for a digital euro, as outlined in a press release dated October 18.

“This decision follows the completion of the investigation phase launched by the Eurosystem in October 2021 to explore possible design and distribution models for a digital euro.”

The next phase, referred to as the preparation phase in the press release, involves finalizing the rulebook and selecting providers to build the platform and infrastructure for the currency. These decisions are based on the insights presented in a summary report from the previous phase, known as 'A stocktake on the digital euro.'

As mentioned in the press release, the preparation phase is set to commence on November 1, 2023, and is initially planned to span two years. This phase includes extensive testing and experimentation to create a digital euro that aligns with the Eurosystem's requirements and user preferences.

It's worth noting that the Governing Council will decide only after these two years whether to proceed to the next stage of preparations, ultimately paving the way for a potential digital euro issuance and rollout. The announcement emphasizes that the launch of the preparation phase does not constitute a definitive decision to issue a digital euro, signifying that there is still a considerable distance to cover.

Christine Lagarde, ECB President, has previously voiced her support for the digital euro project, assuring that it will not provide complete anonymity, unlike traditional banknotes. This stance was taken in response to concerns raised by some members of the European Parliament regarding user data privacy.

In March, Lagarde also acknowledged that there will be a certain level of control following the introduction of the digital euro, albeit a limited amount. This was revealed during an interview, albeit a playful one, where Lagarde believed she was conversing with Ukrainian President Volodymyr Zelensky.

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