ECB Says ‘Investigation Phase’ of Digital Euro Will Take Until Mid-2023
Today, July 14, the European Central Bank (ECB) launched the “investigation phase” of its digital euro project. This initial phase, which is expected to last 2 years, aims to address key issues regarding the design and distribution of the digital euro.
With China preparing for the full roll-out of its own digital yuan, CBDCs are nothing new. However, seeing that the ECB has devoted a notable amount of time to the investigation process alone demonstrates that the central bank is seriously considering their benefits.
ECB Reaches Next Stage of CBDC Development
The ECB has taken its first step towards developing a CBDC. Today, the bank launched the investigation phase of its CBDC, which focuses on the design and distribution of the digital euro, which it has researched for quite some time. In the announcement, ECB said its plans for a CBDC obliges the ability to “prevent illicit activities” while not disrupting financial stability.
However, the bank pointed out that this move does not necessarily indicate that a CBDC will certainly be developed. Rather, the final decision is set to post “investigation.” Moreover, the bank stressed that even if a CBDC is developed, it would be intended to complement cash, not replace it.
Christine Lagarde, president of the ECB, asserted that they have performed several analyses prior to making this decision and that the results were “encouraging.” She stated:
“It has been nine months since we published our report on a digital euro. In that time, we have carried out further analysis, sought input from citizens and professionals, and conducted some experiments, with encouraging results. All of this has led us to decide to move up a gear and start the digital euro project. Our work aims to ensure that in the digital age citizens and firms continue to have access to the safest form of money, central bank money”.
In addition, the ECB has allocated 24 months to the “investigation phase” of its digital euro. Considering that the bank has been conducting experiments in the last 9 months and still devotes two more years, it divulges that CBDCs require some serious time to develop.
Digital Euro Already Raises Privacy Concerns
It is no secret that CBDCs are a disaster for user privacy. With CBDCs, governments will be able to collect as much data about their citizens’ financial backgrounds as they want to. Theoretically, they will be able to monitor, track, and record every single transaction.
A few users have already taken to Twitter to reveal their concerns regarding the digital euro. A pseudonymous user who appears to be from France tweeted:
CBDCs can also make negative interest rates enforceable to everyone — and there will be no place to hide. A user points this out while showing their concern regarding the digital euro:
Nevertheless, the ECB asserted that the digital euro will protect privacy, yet it did not clarify how they would do that while trying to “prevent illicit activities.” It is clear that reaching the right balance would be a big challenge.
The ECB also added that their CBDC will be energy-efficient. The bank stated that the digital euro will require a negligible amount of energy, which shall make it more environment-friendly compared to cryptocurrencies like Bitcoin.
Do you think the European population will embrace the digital euro with open arms? Or will they avoid it? Let us know in the comments below.