A step forward in the digital euro
After two years of study, on 18 October, as communicated by Fabio Panetta to the European Parliament, the European Central Bank (ECB), will start the preparation phase of the digital euro from 1 November 2023, with an estimated duration of two years.
At the same time, the report “A stocktake on the digital euro Summary report on the investigation phase and outlook on the next phase” was released which presents the results of the work carried out (Eurosystem) in the investigation phase on the digital euro and the arguments for moving on to next phase of the project.
The basic idea, as cited in the ECB press release, envisages: “the digital euro as a digital form of cash that could be used for all digital payments across the euro area. It would be widely accessible, free for basic use, and available both online and offline. It would offer the highest level of privacy and allow users to settle payments instantly in central bank money. It could be used person-to-person, at the point of sale, in e-commerce and in government transactions.”
As already expressed in previous posts, the digital euro poses a serious challenge to the European banking system, fragmented within and between member countries. To try to limit the damage, the hypothesis is to place a limit on the possession of digital euros by private individuals to avoid the draining of deposits at commercial banks towards the ECB.
Although nothing is official yet, the general reference is 3000 digital euros, in line with the aim (which indeed appears, at first glance, a bit bizarre) of digital replacement of cash.
The observations already made in this blog on the governance, control and privacy of digital currencies issued by central banks (Central Bank Digital Currency) remain valid.
TThe related Generative Artificial Intelligence question is posted in the dedicated gallery: what are the main challenges facing the digital euro?
The answer is from Google Bard.