Digital euro

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2023: Digital Euro's challenges outweigh its benefits - European Parliament

At the end of April 2023, the European Parliament published a document concerning the project for the introduction of the digital euro. According to experts, the problems associated with the spread and use of such a currency outweigh the advantages of its appearance.

Although the final decision on the release of the digital euro has not yet been made, the European Central Bank (ECB) is busy exploring options for its implementation in anticipation of a potential appearance in 2026. It is assumed, in particular, that digital money will be available through existing banking applications or through a special application of the Eurosystem.

Banks will have to provide a set of mandatory essential services to end consumers, but may offer additional services as well, such as contingent payments or the ability to split payments between individuals. Offline payments are called a useful function, which can be used in case of problems with connecting to. to the Internet At the first stage, the new currency will be available to eurozone residents, trade representatives and government agencies. In the future, third-country citizens from the approved list will receive access to the digital euro.

At the same time, the European Parliament says that the European Central Bank should continue to carefully study the prospects for introducing a digital euro. The fact is that such a currency will put the ECB in a new position, and the planned payment instrument will compete with existing services. It is emphasized that there is no clarity on whether the digital euro will be able to find its niche in the formed "highly diversified, competitive, innovative and rapidly developing retail payment industry." In addition, there are doubts that a new type of currency will increase the availability of financial services in the eurozone.^[1]

2021: ECB approves digital euro pilot

According to the decisions made in July 2021, a study will be conducted within 24 months.

ECB head Christine Lagarde clarified that the purpose of this initiative is "to provide free access to the safest form of money - central bank money - both individuals and legal entities."

Nevertheless, the ECB indicated that the final decision on the possible release of the digital euro will be made later.

"It's been nine months since we published our digital euro report. During this period, we conducted further analysis, studied the opinion of citizens and professionals, and also received encouraging results from several experiments, "said ECB head Christine Lagarde. "All this led us to the decision to move to a higher level and launch the digital euro project," she added.

Over the next two years, experts will deal with key issues such as the design and implementation of a digital currency so that the digital euro can meet the needs of Europeans and at the same time help prevent illegal activities, as well as prevent any undesirable impact on financial stability and monetary policy.

2020

ECB applied for the registration of the trademark "Digital Euro"

In October 2020, the European Central Bank applied for the registration of the "digital euro" trademark.

"The digital euro will aim to preserve the public good that the euro provides to citizens: free access to simple, universal, safe and secure means of payment. The release of the digital euro may become necessary in various scenarios: think about situations where people no longer want to pay in cash, or emergency events such as natural disasters or a pandemic, when other payment services will no longer work, "the document says.

"The digital euro will be a cash supplement, but it will not replace it. Together, they will be able to offer people more choice and more access to payment tools. The digital euro would also become a symbol of Europe's readiness to accept changes and lead in supporting the digitalization of the European economy, "ECB experts say.

France starts testing digital euro

In mid-May 2020, the French central bank conducted initial tests of the digital euro during experiments with the digital currency.

Testing took place on May 14. Within its framework, the Bank of France used blockchain technology developed by its own team to create digital securities representing the euro. The investment bank Societe Generale also took part in the tests.

] French central bank conducts initial digital euro trials in digital currency experiments

Since the beginning of the year, the Bank of France has investigated the possibility of introducing the central bank's digital currency and has been preparing tests with partners aimed at studying the potential contribution of new technologies to the functioning of financial markets and, in particular, interbank regulation, the press release said.

In December 2019, Bank of France Governor François Villeroy de Galhau promised that regulators would begin experimenting with digital currency before the end of the first quarter of 2020. It is noteworthy that the Central Bank did not insist on the use of blockchain as the basic technology of the digital euro.

We intend to quickly start experiments and announce a competition for projects (for players from the private sector) by the end of the first quarter of 2020, - explained then Villeroy de Galau. The digital euro will initially be used between banks rather than ordinary citizens.

The pilot program will be the contribution of the Bank of France to a wider discussion within the EU in the relationship of the transition to digital currency. These tests are not intended to be continued on a long-term basis or widely used by the Central Bank itself, according to a document published by the Bank of France.

Nevertheless, the Bank of France noted that it plans to conduct additional experiments in the next few weeks. In particular, it will test the possibility of sending a digital euro between banks, according to a press release.^[2]

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