The European Commission is putting forth a proposition to establish a framework that will facilitate a potential development of the digital euro under the European Central Bank’s jurisdiction.
As revealed in today’s report, the proposal is a direct response to the growing need for digital payment solutions.
While the commission recognises the euro as a symbol of Europe’s unity and strength and emphasises its place in facilitating payments across the continent, it believes that a digital euro will complement it. It further explained that a digital euro will provide individuals and businesses with an alternative.
An excerpt from the report reads:
“To adjust to the increasing digitalisation of the economy, the European Central Bank (ECB) – like many other central banks around the world – is investigating the possibility of introducing a digital euro, as a complement to cash. The digital euro would give consumers an alternative European-wide payment solution, in addition to the options that exist today. This means more choice for consumers and a stronger international role for the euro.“
The legislative proposal for a digital currency framework is however no guarantee that the digital euro is on the cards. If the proposal is adopted by the European Parliament and Council, it will still be up to the European Central Bank (ECB) to proceed with the development of a digital euro.
Should the digital euro materialise, it will be usable across the continent and accessible both online and offline. Offline payments will offer users a great degree of privacy as nobody will know what their payment is for. Online payments on the other hand will offer data privacy.
CBDCs gaining widespread acceptance
Apex banks around the world are exploring the possibility of using digital currencies to improve payment systems. This development has seen a number of them partner with companies in the crypto space to provide the necessary infrastructure for the development of a Central Bank Digital Currency (CBDC)
The Bank of International Settlements (BIS) and Bank of England (BoE) partnered with Quant Network to explore the use of CBDCs in facilitating payments through APIs. The scheme dubbed ‘Project Rosalinda’ successfully completed the initial test phase, leading to speculations of an imminent digital version of the pound sterling.
The news of the collaboration came just a day after Ripple teamed up with Banco de la República (Central Bank of Colombia) to explore the application of blockchain technology in payments. Ripple’s technologies – Ripple’s CBDC and its open source blockchain, XRP Ledger will provide the necessary infrastructure for the bank to issue its CBDC.