“The EC announced Wednesday that it plans to propose a bill for a digital euro early next yr” — Paul Ebeling
This bill will serve as the legal foundation for the European Central Bank’s ongoing technical work on the virtual version of a euro banknote or coin.
Central banks across the world are developing virtual money to ensure they are not undermined by the growing popularity of cryptocurrencies, which has inspired Big Tech to eye ways to enter the payments market.
“We must push forward with full speed. No one will wait for us,” German Chancellor Olaf Scholz told reporters last yr when he was finance minister. “I am convinced that eurozone countries need to take part more actively in the process and play a stronger role.”
The Commission’s plans to move forward with a bill is the most definitive sign so far that a digital euro could become a reality in the coming yrs. Since last year, the ECB has been giving mixed signals about the future of a digital euro. In September, just before the ECB’s 2-yr investigation into a digital euro kicked off, an ECB official said the project would not guarantee the launch of a digital currency.
With the rising popularity of private cryptocurrencies like bitcoin and stablecoins, which are pegged to the value of assets like the USD research into central bank digital currencies (CBDCs) has picked up around the world. A number of countries, including Canada and China, are running pilot programs, and Nigeria launched a CBDC in October.
The US leads, but Europe is moving at a slow pace. In September 2020, ECB chief Christine Lagarde said that the EU has fallen behind in the digital payments race and that a digital euro could give it an edge.
Despite the urgency Ms. Lagarde expressed at that time, things are still moving at a slow pace.
“The digital euro discussion is a very, very slow discussion because it’s corporate, and the central bank plays a role. This makes it very complicated,” said a German economist and head of the Frankfurt School Blockchain Center.
The Commission first published a report on a digital euro in October 2020, which was open to public comment until January 2021. A 2nd public consultation is set to kick off next month.
Have a happy, prosperous weekend, Keep the Faith!