- The ECB announces public consultations before launching the digital euro.
- The regulator will retain control over the new form of money.
The European Central Bank launches public consultations on the digital euro and starts experimenting with the new type of money. The processes will go in parallel. The final decision will be made by the middle of 2021.
The European regulator says that the digital euro will preserve the single currency's benefits and help to deal with the situation where people can no longer use cash. For example, the digital version is deemed to cushion the impact of natural disasters or pandemics, when the traditional financial services may be unavailable.
Apart from that, ECB emphasized its focus on digitalization and technological development.
A digital euro would make your daily payments faster, easier, and more secure. It could support the digitalization of the European economy and actively encourage innovation in retail payments.
Decentralized and traceable
Despite the pivot to the decentralized structure of the digital currency, the ECB insists that all payments should still be traceable and controlled by the regulator.
The ECB is the custodian of the euro, be it as banknotes or in digital form, on behalf of the people of Europe. We want to make sure the value of our money is preserved and that any form of digital euro is ultimately safeguarded and regulated by the central bank.
The digital euro is not a cryptocurrency
Notably, the European Central Bank explained the difference between the cryptocurrency assets and the digital euro.
Crypto-assets are fundamentally different from central bank money: their prices are volatile because they lack any intrinsic value, and there is no reliable institution backing them.
Unlike other digital assets, like stablecoins, the euro will be backed by a central bank and have the same level of confidence as the fiat money.
The regulator laid out several basic requirements for the digital euro; however, the final decision has yet to be made following the public consultation process that will start on October 12.
It is too early to identify any specific type of digital euro, but we have laid down some basic requirements, such as robustness, safety, efficiency, privacy and compliance with the law. We will now listen and experiment to define what it might look like in the future 3/3— European Central Bank (@ecb) October 2, 2020
earlier, the FXStreet reported that the ECB filed an application to register the term 'digital euro',