The European Central Bank is expected to roll out the digital euro in the next four years, pending regulatory approvals.
Authorities have hinted at renewed efforts to advance the technology in line with other jurisdictions now in pilot phases. Critics remain defiant, highlighting potential complications and risks associated with traditional finance.
Digital Euro Prep Enters New Phase
According to the ECB, the next phase to achieve the digital euro is now underway and needs the right regulatory framework. The bank recently concluded the initial preparation phase, which kicked off in 2023, and has set new dates to achieve future milestones. If legislation is in place by 2026, a pilot phase could commence in 2027.
However, the first issuance is scheduled to begin in 2029, with the central bank digital currency (CBDC) being deployed to consumers. The bank began working on the digital currency in 2020 to rival the growth of private cryptocurrency assets and provide users with more payment options. A key milestone attained so far is the selection of the digital euro service platform.
“The sourcing process covered both externally procured and internally sourced components. Externally, the European Central Bank (ECB) launched tenders for five components of the DESP; core settlement and issuance components were sourced within the Eurosystem. Five external providers were selected, and they all signed framework agreements,” the bank wrote.
Piero Cipollone, ECB Board member, reiterated the importance of the CBDC to everyday payments amid pushbacks from critics. Benefits include low-cost transactions, multiple options, and an opportunity to innovate within the ecosystem. In a recent announcement, the bank stated that it will complement cash and ensure that users have access to public and trusted means of payment.
On the other hand, pro-crypto commentators have criticized CBDC, describing the technology as a tool to promote government control. This sparked the global debate between CBDCs and stablecoins, with most governments backing the former. Aside from government control, critics have also raised concerns about privacy.
Authorities prefer CBDCs because they give them the power to limit the impact of Bitcoin and other cryptocurrencies. Furthermore, the issue of jurisdiction and the issuance of stablecoins arises, as the dollar backs most assets. This year, several countries introduced positive legislation to regulate domestic stablecoins under their control.
This followed global institutional interest in stablecoins in the same period. Banks and other corporations establish joint collaborative efforts to scale cross-border finance, thereby lowering costs.
Source: https://zycrypto.com/digital-euro-on-track-for-2029-pending-legal-framework-ecb/
