On October 18, the Governing Council of the ECB declared that it had decided to move to the next phase of the digital euro project.
The move to the preparation phase of a potential European CBDC follows the completion of a two-year investigation phase.
The preparation phase will begin on November 1 and will initially last two years. This will involve finalizing the rules of the digital euro, selecting technology suppliers and carrying out tests.
The digital euro in two years?
After the preparation phase, which should end at the end of 2025, the ECB will decide whether to move forward with the issuance of a CBDC. This decision would only be taken once the European legislative process is completed, which is expected to continue next year.
“The launch of the preparation phase is not a decision whether or not to issue a digital euro,” he confirmed.
Ultimately, the EU’s legislative bodies – the European Parliament and the Council of the EU (member states) – will decide whether or not a digital euro will be launched, said Patrick Hansen, director of strategy and Circle’s European policy. added:
“A legislative process is currently underway and discussions on the European Commission’s proposal have already started, but it will probably take some time (until after the European elections in June 2024) before the European institutions vote on the subject .”
The proposed digital euro would be a digital form of cash, allowing private offline payments. It would be widely accessible, free for basic use and offer the highest privacy standards, according to the announcement.
“We must prepare our currency for the future,” declared Christine Lagarde, president of the ECB, before adding: “It would coexist with cash, which will always be available, leaving no one behind.”
Users could access digital euro services via banks or a “Eurosystem” app. Those without a bank account could use a card from a public entity like a post office.
Latest CBDC Outlook
Earlier this month, the Bank for International Settlements (BIS) and the central banks of France, Singapore and Switzerland announcement the success of a new CBDC initiative called Project Mariana.
According to the Atlantic Council CBDC Tracker11 countries have deployed a CBDC, most in the Caribbean, with the exception of Nigeria.
However, several American senators are Vehemently opposed to a CBDC, claiming it would undermine financial privacy and enable state surveillance.