The long-awaited study and research findings from the European Central Bank (ECB) over a potential Central Bank Digital Currency (CBDC), the digital euro, will be revealed in the coming weeks, says ECB President Christine Lagrade. As reported by Reuters, the ECB will present the advantages and disadvantages of rolling out a digital euro and launch a consultation thereafter.
Due to the immense scale of the digital euro project should it come to fruition, involving not only the ECB but also 19 other central banks in the eurozone, one of the ECB’s primary concerns has to do with operational difficulties. Not only would they have to ensure that the digital euro project is feasible and achievable, the ECB has to consider the repercussions of the project on the banking sector and also on other possible solutions that could be offered in the future by firms in the private sector.
The ECB task force specializing in CBDC research was formed in December last year, shortly after Lagarde was appointed President of the ECB in November, just a month prior. She urged Europe and the European Union to “be ahead of the curve” because “there is clearly a demand out there that we have to respond to”.
Recently in July, the Banque de France announced that it was working with eight other financial institutions including Accenture, Seba Bank, HSBC, Sociale Generale – Forge to test a CBDC for interbank settlements and also to discuss regulations on cross-border financial transactions. This project also involves the Deutsche Bundesbank and ECB, where they expect to establish a new joint innovation center within Europe.
You may also want to read: Banks Can Now Test CBDCs with Mastercard’s Newly Launched Virtual Platform