The ECB is looking into the introduction of the e-euro, which will combine the efficiency of an electronic payment instrument with the security of a central bank's money.
Two decades after its introduction, the euro is evolving. On the one hand, the process of completely redesigning banknotes, which will begin replacing current ones in 2024, has begun. On the other hand, the European Central Bank (ECB) is investigating the possibility of introducing an e-currency.
Now, digital transformation has pervaded every aspect of our lives, transforming how we execute payments. The digital euro, according to ECB, could ensure that European citizens continue to have free access to a simple, universally accepted, secure, and reliable method of payment in this new era.
If a new digital currency is created, it will almost certainly be the euro. To put it another way, it will be an electronic form of money issued by the Eurosystem that can be used by both natural and legal persons. It will not be a replacement for cash in this situation, but rather a supplement. It will provide a new and more convenient method of payment.
The digital euro would combine the efficiency of an electronic payment instrument with the security of central bank money. It would aid in dealing with situations where people no longer want to use cash and would prevent reliance on digital payment methods issued and controlled by entities outside the euro area.
Simultaneously, personal data protection would be a top priority in order for the digital euro to contribute to payment confidence. Finally, it would aid the European economy's digital transformation and promote retail payment innovation.
At this stage, the ECB and the Euro Area’s national central banks are weighing the benefits and risks in order for the currency to continue to meet Europeans' needs. "We will be in contact with decision-makers at European level and provide them with regular updates on our findings. Citizens, merchants and the payments industry will also be involved in the whole process,” Fabio Panetta, a member of the European Central Bank's Executive Board, recently stated.
The decision to start the digital euro project was made in July 2021, and it is expected to be finished in the autumn of 2023. During this time, consideration will be given as to how it might be designed and distributed to traders and the general public, as well as what impact it might have on the market and what changes to European legislation might be required. However, Frankfurt emphasizes that this "does not necessarily mean that we will issue a digital euro. But we will prepare for its eventual extradition."
By fLEXI tEAM