The European Central Bank (ECB) today took the first step towards launching the digital euro. Its plans are linked to a global effort to meet the growing demand for electronic means of payment, but according to Reuters, it also wants to deal with the cryptocurrency boom.
The digital euro, as the electronic equivalent of banknotes and coins, is likely to take the form of a digital wallet that euro area citizens will be able to keep with the ECB, not with commercial banks.
The Governing Council of the ECB today launched a green investigation phase of the project, which should last two years and be followed by a three-year implementation.
The main aim of this initiative is to prevent digital payments from being controlled by the private sector, especially if the use of physical cash begins to decline, as has happened in Sweden.
“The aim of our work is to ensure that citizens and businesses have access to the safest form of money, even central bank money, in the digital age,” said ECB President Christine Lagarde.
The ECB will now start working on the digital euro and discuss it with stakeholders – from banks to retailers. The Treaties of the European Union did not provide for a digital euro, so the process will not be possible without legislative changes.
The central bank will also define the role of banks and financial technology companies, which are likely to offer digital wallets to their clients on behalf of the ECB. The ECB tested the project last year and did not identify any major technical barriers to the general ledger, privacy protection or the use of digital currency outside the Internet.
Work on the digital euro gained momentum when the American internet company Facebook presented a plan to create its own currency in 2019.
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