The Governing Council of the European Central Bank (ECB) is prepared to move the digital euro initiative into the preparation stage. This follows the conclusion of the investigation phase that the Eurosystem declared in October 2021. The design and allocation modules for a digital euro were to be analyzed. From this, the ECB has developed a design for a digital euro that will be distributed to individuals and businesses through allocations closely monitored by intermediaries such as banks.
The design conceives of the digital euro as digital cash, which is utilized for payments within the euro area. It will be accessible both online and offline. It will feature complete anonymity, and users will have the option to settle payments immediately. Every avenue will be left open for its usage.
Next in line is the preparation stage, which will commence on November 1, 2023, for a period of two years. This will comprise finalizing the digital euro rulebook and choosing the providers who are capable of creating a digital euro platform and framework. Experiments and tests will be conducted to ensure the digital euro lives up to the expectations of the Eurosystem and users’ requirements. The next stage will be pondered after two years.
The preparation stage will have no hand in deciding the release of a digital euro. That will depend on the Governing Council after the conclusion of the European Union’s legislative procedure. The redesigning factor, if found necessary, will be looked into by the ECB.
According to the president of the ECB, Christine Lagarde, this is getting the currency ready for the future. The plan is to make the digital euro run concurrently with the tangible cash. Top of mind will remain the safety issues surrounding the digital euro. Every sort of privacy-related matter will also be closely studied.
The digital euro is expected to bring about healthy competition and innovation in the European payments space. A pan-European attribute is also being looked into. It will offer a platform for European middlemen to create pan-European services for users and will come with added effectiveness and cost-cutting.
In the words of Fabio Panetta, member of the ECB Executive Board and chair of the High-Level Task Force, once people embrace digital payments, issuing a digital euro alongside cash will be necessary. This will contribute to the enhancement of the efficiency of European payments.
For users, the digital euro services will be made available through their payment service provider’s application and online interface. People who have no bank accounts will be able to make payments via a card. The digital euro will be exchangeable for cash.
There will be certain incentives for allocating the digital euro for middle parties, and it will come with the necessary safety features.