ECB Digital Euro Project Scales to Preparation Phase

The European Central Bank (ECB) is progressing its digital Euro initiative into a preparatory phase, marking a significant step toward a potential issuance. The decision follows the conclusion of a two-year investigation phase focused on issuing a Central Bank Digital Currency (CBDC) for retail use within the European Union (EU).

As per the announcement, the move which will begin 1st of November and span for two years, signifies a critical juncture in the ECB’s exploration of a digital Euro. This phase will involve detailed planning, risk assessments, and consultations with various stakeholders.

Digital Euro will Prioritize User Privacy

Despite the initial timeline for a verdict on the CBDC’s issuance, the ECB has encountered growing criticism concerning its outlined plans. Notably, this dissent has emanated from various quarters, including lawmakers, who have raised concerns about privacy issues.

Consequently, the ECB has emphasized its decision to prioritize data protection adding that the digital Euro would provide a “cash-like privacy” as the Euro System would not be able to see user’s personal details. However, the ECB’s careful navigation through these concerns has become crucial in shaping the future of the digital Euro. 

Digital Euro Still Need Approval

Meanwhile, the move to the preparation phase does not in any way mean that the central bank has decided to issue a digital Euro. The final decision on implementation and issuance will be made by the Governing Council once the EU’s legislative process has been concluded.   

Furthermore, the preparation phase involves concluding the digital Euro rulebook and selecting providers that will assist in developing the digital currency platform as well as its infrastructure. Also, during the phase, the digital Euro will be tested to see if it meets the Eurosystem’s requirements and user needs. 

Central Banks Double up on CBDC Projects

As several financial monetary watchdogs look to tap into the financial advancement offered by digital currencies, many nations of the world are exploring the potential benefits of CBDC in their financial economy. This proliferation has led to the launch of research programs by many countries while a few others launched their CBDCs.

Recall that the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Center (DFCRC) have sought submissions from members of the business community on the use cases of the CBDC. The pilot for the digital currency dubbed “eAUD” is expected to run from January to April with a few selected uses. 

Also, Nigeria with the launch of its e-Naira became the first country in Africa to launch its CBDC. Other countries are also in the advanced stages of their CBDC development.