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Digital Euro

ECB Garners Over 8,000 Responses To Its Public Digital Euro Consultation

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The central bank digital currency [CBDC] wave seems not to spare anyone. A few months ago, the European Central Bank aka ECB, taken an interest in CBDCs and decided to move forward with its research.The bank, however, chose to involve the public as it intended to garner the public’s expectation on the development of the digital euro.

Just as China and Japan have been announcing the swift development of their CBDC, Europe seemed to be taking it slow. Christine Lagarde, President of the ECB, even revealed that developing the digital euro could take up to four years. Even so, the bank’s latest announcement seemed to be promising.

ECB’s Digital Euro Must Entail Privacy

The central bank had allowed the public to list out their priorities and expectations with the digital euro, under the public digital euro consultation initiative. The bank managed to amass over 8,200 responses out of which 47% of the responses were from Germany. Italy and France recorded a total of 15% and 11% respectively. This consultation was rolled out back in October 2020 and went on till 12 January 2021.

Furthermore, with 94% of these respondents being private citizens, over 43% sought privacy from the digital euro. About 18% of them expected security from the CBDC. The ECB further wrote,

“Privacy is the most important feature of a digital euro for both the public and professionals, especially merchants and other companies. Both groups support requirements to avoid illicit activities, with fewer than one in ten responses from members of the public showing support for full anonymity.”

Interoperability is a must now. The ability to pay across different areas of Europe was demanded by 11% of the participants. While 9% did not want additional costs the remaining 8% asked for offline usability.

The ECB further reported that the aforementioned numbers were a record for the bank with regard to the participation of the public. Hearing out the needs of the public, the Executive Board member of the bank, Fabio Panetta suggested that the digital euro would be successful only if it complied with the demands of the public. Panetta added,

“We will do our best to ensure that a digital euro meets the expectations of citizens highlighted in the public consultation.”

ECB Most Likely To Take 2-4 Years To Develop Digital Euro

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Central banks have been speeding towards the launch of a digital currency. The ECB has also been steering towards the same. With China and several other countries ahead of the CBDC game, the pressure on certain countries has surged. ECB, however, isn’t trying to get on top of the game.

ECB To Explore Prospects Of Digital Currency

In the recent European Central Bank [ECB] Forum on Central Banking 2020, the President of the ECB, Christine Lagarde addressed the development of central bank digital currencies [CBDC]. While she assured that the platform is keen on developing a digital currency, she pointed out that the bank is not “racing to be first.” Lagarde had a “hunch” that the European digital currency would make its way into the financial market.

While the COVID-19 pandemic put the world in shackles further unveiling the need for digitalization, several countries commenced probing and developing digital currencies post the pandemic. However, the concept of incorporating a digital currency into the existing system came to light following the need for elevated monetary sovereignty. She added,

“It’s not a nicety, it’s not a tantrum, it is something that if it’s cheaper, faster, more secure for the users then we should explore it. If it’s going to contribute to a better monetary sovereignty, a better autonomy for the euro area, I think we should explore it. If it is going to facilitate cross border payments, which are very laborious in quite a few corners of our big world, then we should explore it.”

Just last month, the ECB revealed that it would be “intensifying” its endeavors in the development of the European digital currency. While the EU recently denounced the efforts of other private sectors to launch a stablecoin, it asserted that the issuance of a stablecoin should be limited to the ECB only.

Elaborating on the development and issuance of the digital euro, the President revealed that the currency would not be available right away. She suggested that the CBDC could take about two to four years to enter the global financial scene.

European Central Bank Takes Major Step Towards Crypto Adoption- Plans to Trademark “Digital Euro”

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The world of cryptocurrencies has come a long way since the first Bitcoin was first created by Satoshi Nakamoto. From being considered as a fringe asset class, cryptocurrencies were now being integrated into national government frameworks.

Latest reports from the European Central Bank revealed that the body was in the process of trademarking the term “digital euro”. This comes at a time when several governments across the world were also dabbling in creating their own centrally backed digital currencies.

Information from the bank revealed that the trademark application was filed on September 22 with the intent of pushing the digital movement. The bank added that the trademark would facilitate the seamless and safe integration of the digital economy with the current fiat institution. This decision comes on the back of the ECB’s mantra that they need to be plugged into the latest fintech developments.

Christian Lagarde, the President of the ECB has repeatedly been in the news for addressing cryptocurrencies and the way the financial sphere may transform in the years to come. During a recent speech, she said:

“The Eurosystem has so far not made a decision on whether to introduce a digital euro. But, like many other central banks around the world, we are exploring the benefits, risks and operational challenges of doing so. We have a duty to play an active role in balancing the risks and benefits of innovation in payments, so that money continues to serve Europeans well.”

The discussion on digital currency adoption has been ongoing for years now and it is only now that it has received major traction After the report was made public, the cryptocurrency community was filled with a lot of positive reactions. Many believed that the acceptance shown by a traditional institution was just the key required to bring crypto into the mainstream fore. It still remains to be seen how the digital euro will be implemented which will have far-reaching implications on all of the financial space.

 

The Central Bank of France Enlists Eight Financial Firms Services In Its Digital Euro Trials

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The Central Bank of France has enlisted eight major financial sector firms to collaborate on its bid to pilot test the digital Euro. The partnership includes the digital currency testing as well as the interbank settlements of the central bank.

The financial authority named firms includes Accenture, Euroclear, HSBC, LiquidShare, ProsperUS, SEBABank, and Societte Generale. Previous reports also say that France’s central bank has already conducted tests with one of the firms, Societte Generale. The tests were carried out in a real-world form of transaction, and besides that, with the aforementioned eight companies they intend to even extend the tests further.

Digital Euro trials to focus on key areas

In a statement released on July 20, France’s central bank revealed the planned tests would focus more on the three key areas. Core areas include devising new ways of trading financial instruments for central bank funds; evaluating digital currency regulation to boost the execution of international payments by making favorable conditions for these transactions, and updating the forms in which CBDCs are made available to the public.

Monetary authorities across the world working on CBDC

Following the devastating effects of COVID-19, more and more people have moved to embrace digital currencies. This has forced central banks around the world to step up their efforts to create a digital currency as people are now actively avoiding contact fiat currency. As a result, this action has prompted Central Banks to increase their efforts on CBDC in a bid to curb the virus’ spread.

More central banks around the world are expected to launch their digital currencies, with nations like China poised to become the first nation to issue its very own digital currency. For the last 5-6 years, the Chinese central bank has been working on their digital yuan. A  recent study by the Bank of International Settlements (BIS) shows that central banks are more likely to issue CBDCs in developing nations than in developed nations.

Lithuania Set to Issue Own Central Bank Digital Token

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The first digital token backed by the central bank will soon be launched in the eurozone. According to the Reuters report on 2 July, Lithuania will be the first eurozone nation to issue a digital central bank token. The report notes that 24,000 digital tokens, dubbed LBCOIN, based on the blockchain, will be issued within a week.

Facebook Libra sparking CBDC activity globally

Crypto-friendly Baltic nation will issue LBCOINs as part of its plan to test central bank digital currencies and blockchain technology in day-to-day applications. The news of the launch of the central bank’s digital tokens follows the release of the Libra Whitepaper on Facebook. The development of the new Facebook Libra has forced central banks to accelerate their CBDC plans.

Moreover, the deputy governor of the Bank of Lithuania, Marius Jurgilas, while talking to Reuters on the new digital tokens said:

“No one in the central bank community was thinking about digital currency seriously before we realized that there is a legitimate threat that someone else will take our space… We need to provide society with what it wants.”

Central bank digital token to be exchanged for physical coins

In addition, the Deputy Governor noted that LBCOIN is identical to the central bank digital currency, which is fiat in digital version, issued and administered by the central bank. In particular, the digital tokens of the central bank will be distributed at €99 ($111.28) in a bunch of six. And the bands will have an attached image of one of the 20 individuals who signed the declaration of independence of Lithuania in 1918.

The Bank of Lithuania expects residents to trade a digital token with orders to create a specific set that can be exchanged for a physical silver con the size of a regular credit card. As stated in the report, the physical coin will have a nominal value of €19.18 ($21.55). The holders of LBCOIN may immediately exchange the digital asset with the Bank of Lithuania and the private blockchain infrastructure, as stated in the report.

 

Italian Banks Express Desire to Test Digital Euro

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According to the recent report, Italian banks have expressed their desire to explore the European Central Bank Digital Currency. The Italian Banking Association (ABI), composed of 700 financial institutions, wants to accelerate the general implementation of the CBDC, which is backed by the European Central Bank ( ECB).

In regards, ABI has also handed out ten recommendations for a European digital currency during its Thursday announcement. The initial advice, which is the most important, suggests comprehensive complaisance with the appropriate European regulatory structure. On top of this, ABI also suggested financial sustainability as another crucial area.

Digital currencies are beneficial

The association also highlighted some advantages of a CBDC. It noted:

“A programmable digital currency represents an innovation in the financial field, capable of profoundly revolutionizing money and exchange. This is a transformation capable of bringing significant potential added value, particularly in terms of the efficiency of the operating and management processes”.

The development of a central bank cryptocurrency can aid in positioning Italy at a favorable spot to have proper administration of the country’s digital landscape. The features of the digital Euro can offer additional security to the financial system, on top of eliminating the inconveniences related to critical financial transactions like transferring of funds.

Furthermore, digital currencies can help a country achieve a completely cashless economy. This is particularly cost-effective since the cost of developing fiat currencies will be slashed or wholly abolished.

Italian banks dawn of innovation

The announcement highlighted the fact that digital currencies are programmable positions them as crucial innovations in the finance sector. ABI stated that Italian banks believe that the development of digital currencies will immensely revolutionize money and the financial system altogether.

Italy has joined several other countries that have expressed the desire to deploy a central bank digital currency. Early this year, the Bank of France asked the public to submit proposals for the possible experimentation of a CBDC. Furthermore, South Korea also established a panel early this month to research digital currencies.