The European Central Bank (ECB) has been discussing the introduction of a digital euro for some time now, and it seems that the decision to move forward with the project has already been made. The ECB recently released a project paper, and a 24-month review phase has begun. During a preliminary testing phase, no technical obstacles were found, indicating that the digital euro is likely to be introduced soon. This technology will allow citizens to make payments in stores and online without using cash or visiting a bank.
The ECB has stated that it does not make sense to completely replace cash, as it would be too costly. Instead, the Eurosystem is planning how to prepare for the introduction of e-money in Europe by regularly reporting to lawmakers. The digital euro is expected to offer the same security, reliability, traceability, and efficiency as cash while enabling innovative payment services. The ECB will initiate an investigation phase to evaluate the various impacts of a digital currency on the market. The “supervised intermediaries” will offer an optimized payment service while optimizing data protection and privacy through the use of new technology.
The introduction of a cashless currency is one of the most important steps towards an economy dominated by cashless payments. A digital currency issued by a central bank for specific purposes has several advantages over a private solution but also carries risks. These include security and privacy concerns that could become problematic if a central authority uses data for decision-making. A digital euro could help restore trust in the current financial system and reduce transaction costs for users. It could also include those who are currently excluded from the financial system and allow users to make purchases in any country in the Eurozone. A digital currency would be a direct claim on the central bank, just like cash, and would not be used for speculation, reducing the risk of losses. The creators of the currency would have no commercial interest in monetizing user data, which would help protect people’s privacy while maintaining the simplicity of the currency.
