An October 2, report revealed that a digital euro could be on the way. The report stated that the European Central Bank could begin serious studies on the digital euro next year.
The report looked into how a digital euro could impact retail payments and how it could protect payments going into the future. It also looks at how such a currency could fit into the euro zone ecosystem and function optimally. The report does not specify what model the euro zone should adopt through the European Central Bank though.
The report indicates that the ECB could move ahead with a virtual currency program. The program will help address certain questions or like the document stipulates; it will help “to ensure meaningful answers are obtained to the open questions raised”. An investigation phase will most likely start the process off, then followed by a testing phase by the middle of next year. As per the document, various stakeholders must have their views heard before the currency can go live.
The report mentioned a few potential benefits of having the currency, and one of them was financial accessibility;
“The possible advantages of a digital euro and the rapid changes in the retail payment landscape imply that the Eurosystem needs to be equipped to issue it in the future. A digital euro could support the Eurosystem’s objectives by providing citizens with access to a safe form of money in the fast-changing digital world. This would support Europe’s drive towards continued innovation. It would also contribute to its strategic autonomy by providing an alternative to foreign payment providers for fast and efficient payments in Europe and beyond.”
Criterion for a viable digital euro
According to the ECB, a viable digital euro must satisfy certain criteria before being created and eventually let out for use
- In tandem with technology
A viable digital euro must keep pace with technology to effectively serve the entire euro area. According to the ECB it must be made available “through standard interoperable front-end solutions throughout the entire euro area and be interoperable with private payment solutions.”
2. Should mirror aspects of fiat currency
The currency should basically be free to use, easily available and protect user privacy. It must also have other functionalities according to the ECB “that are at least as attractive as those payment solutions available in foreign currencies or through unregulated entities”. It should also be available outside the Euro zone, be cost saving and environmentally friendly.
While the report is quite detailed on how the currency should be, it encourages more participation and discussion. Other stakeholders will be welcome to weigh in and add their voice to the creation of this continental digital currency. The report is great follow up to the ECB’s pronouncement last year that cryptos were no threat to the region’s financial stability.
