In our increasingly digitalized world even the electronic payments are prevailing over cash payments, probably an effect caused by the spread of the pandemic.
The ECB (European Central Bank) is working in order to create a digital euro, the CBDC (Central Bank Digital Currency), an electronic form of central bank money accessible to both citizens and firms. The ECB highlights that it will not be created to replace cash, but will be an additional choice of payment.
Last October the ECB published a report that includes both pros and cons of this project. The reasons to issue this new form of payment, its potential effects, the legal considerations, its functional design possibilities and technical and organizational approaches were published in another report of more than 55 pages.
The report will be the basis for a dialogue between citizens and external stakeholders. The ECB, the European Parliament and other European institutions will discuss and decide on the legislative and operational structure that will be necessary for a digital euro.
A digital euro would work like Bitcoin, but it is not to be confused with the latter, and would be stored in digital wallets. It is considered as a fast, secure and easy payment method.
The creation of this “digital currency” could last from eighteen months up to three years. Safety, robustness, compliance with the law, easy accessibility, efficiency and privacy are the basic requirements that must be kept in mind for this project.
Fabio Panetta, ECB Executive Board Member said: “We need to make sure that our currency is fit for the future. Inaction is not an option”.
Now the question is: when will the CBDC be available? Certainly, first of all there will be an experimentation and investigation phase, the European Central Bank have launched a public consultation (available until 12 January 2021) thus citizens can make their contribution to the project. Towards the middle of next year, the ECB will decide whether to launch a digital euro.
“The euro belongs to Europeans and we are its guardian. We should be prepared to issue a digital euro, should the need arise” said Christine Lagarde President of the ECB.