The European Central Bank’s Governing Council has announced the commencement of the preparation phase for the digital euro project, marking a crucial step toward a potential European Central Bank Digital Currency (CBDC). This decision comes after the completion of a thorough two-year investigation phase.
Starting from November 1, the preparation stage is set to span over the next two years. During this period, efforts will focus on finalizing the digital euro rulebook, selecting appropriate technology providers, and rigorous testing processes. These essential steps are pivotal in shaping the future landscape of digital currency in the European Union.
Path Forward: Decision-Making and Legislative Process
Upon the conclusion of the preparation phase in late 2025, the ECB will assess the progress made and determine whether to proceed with the issuance of a CBDC. However, it is crucial to note that the launch of the preparation phase does not confirm the issuance of a digital euro. The final decision rests with the European Union’s legislative bodies, specifically the EU Parliament and the Council of the EU (member states).
Patrick Hansen, Circle’s Director of EU Strategy and Policy, highlighted, “Discussions on the EU Commission proposal are already underway, but a formal vote on the topic might not occur until after the EU elections in June 2024.”
Understanding the Proposed Digital Euro
The digital euro, if implemented, would serve as a digital form of cash, facilitating private offline payments. It aims to be widely accessible, offering basic usage for free and ensuring the highest standards of privacy. Christine Lagarde, President of the ECB, emphasized the need to prepare the currency for the future. She stated, “It would coexist alongside physical cash, ensuring no one is left behind.”
Users would have the option to access digital euro services through traditional banks or a dedicated “Eurosystem” app. Notably, individuals without bank accounts could utilize a card issued by a public entity, such as a post office, providing a seamless way for everyone to participate in the digital economy. Stay tuned for further updates as the digital euro project progresses, reshaping the way Europeans engage with their currency.