Europe to launch Central Bank Digital Currency by mid 2021

According to the ECB, a digital Euro would help citizens access quick money in a fast-changing world amidst the Covid-19 scenario.

By · Oct 5, 2020 . 5min read

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The European Central Bank (ECB) will conduct a series of experiments with a digital euro while holding a public consultation. The European Central Bank (ECB) published its paper on the digital euro. The published paper emphasizes the advantages, risks, and possible designs of this digital currency project. Moreover, it will commence a three-month public consultation from October 12. The ECB says that a decision on whether to move ahead with a virtual currency project will come around mid-2021.

According to the paper, the ECB distinguishes the digital euro from crypto-assets, which are not the liability of any entity and stablecoins that make an effort to be stable. It also indicated that a digital euro would complement cash. The ECB says that it should be ready to introduce CBDC if a scenario necessitates. 

The Digital Euro would eliminate Cybersecurity Threats.

The ECB believes that a digital euro could support where citizens have abandoned cash, international forms of electronic money have taken over, or other means of payments have become unavailable. A digital euro could wave off risks like the cybersecurity threat to private-sector payment systems. The report emphasizes that a digital euro would offer a new means for monetary policy transmission. However, it would potentially expand the euro’s role internationally and enhance payment systems’ costs.

The paper draws 14 requirements and possible designs. While it hasn’t come to a decision, it favours using mediators rather than having citizens with direct central bank accounts. However, it intends to examine both account-based scenarios held through intermediaries and tokens. Moreover, privacy was a matter that had varied messages in the paper. The paper describes a CBDC as a better privacy alternative than a private solution. Furthermore, it also states privacy to be a desirable characteristic. There are also various suggestions for various degrees of privacy.

Conclusively, the move comes as consumers increasingly whirl towards cashless payments. The COVID-19 pandemic has stimulated the move towards electronic payments, as customers avoid notes and coins because they might be susceptible to coronavirus.

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