Soon a digital euro? The ECB reaches an important milestone

An important date for the future of the euro? On July 14, the European Central Bank announced its intention to launch a pilot project to explore the advantages and risks of introducing a digital version of the euro. The project is scheduled to last two years. During this period, the ECB aims to identify a possible conception of digital currency as well as its potential impact on the European economy. In addition, the bank has certified that it will not replace the physical euro. Rather, it would be a sideline for diversifying the forms of payment. Digital transactions will still be much faster than today. The ECB stressed on its website that a digital euro would be distinguished from cryptoassets, which are not backed by any public institution and whose prices are subject to volatility. A digital euro would be as stable as the physical euro.

No technical obstacle

Experiments have been carried out in the following four areas: the digital euro ledger; privacy and the fight against money laundering; limits on the digital euro in circulation; user access without internet connection and facilitating inclusion with appropriate devices. No major technical barriers were identified for any of the design options evaluated.

A digital form of the currency used by the 19 countries of the so-called Eurozone could be an alternative to third-party payment services and cryptocurrencies like bitcoin. Interest in cryptocurrencies has exploded in recent years. But international bankers fear that the widespread use of foreign or unregulated currencies could destabilize the European economy. This pilot project also seems to be a response to the Chinese advance. If China has decided to ban cryptocurrencies from its territory, it is to better launch its digital yuan. For some, it is expected between the end of the year 2021 and the beginning of the year 2022. On the side of Europe, it is a real answer proposed by Christine Lagarde, President of the European Central Bank, and her teams that regularly warn investors about the volatility of cryptocurrencies.

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