The European Central Bank (ECB) has revealed that it plans to start investigating the possibility of a digital Euro with the launch of a 2-year investigation. Christine Legarde, the president of the ECB, believes that the bank should be ready to address the people’s demand for digital currencies.
She stated that the ECB should come up with a European solution that does not jeopardize the banking system.
Responding To The Demand For Digital Currencies
In an interview with Klaus Schwab, the founder and executive chairman of the World Economic Forum, Legarde spoke up about central bank digital currencies (CBDCs) and, in particular, about the digital Euro. Legarde tweeted after the interview to announce the launch of the two-year investigation,
“We at ECB believe that we should be ready and have the technology available to respond to people’s demands. That’s why we are launching a two-year investigation into a digital euro.”
Legarde further commented explaining her position to Schwab, stating,
“If customers prefer to use digital currency rather than have banknotes and cash available, it should be available. We should respond to that demand. And make sure that we have a solution that is European based, that is secure, that is available under friendly terms, that can be used as a means of payment at reasonable terms as well and does not jeopardize the whole banking system, which should be part and parcel of the proposal.
After the conclusion of the investigation phase, the ECB will decide whether they should start developing a Digital Euro or not.
Objectives Of The Investigation
Legarde discussed CBDCs and the rationale behind a 2-year investigation period for the digital Euro, outlining the objectives of the investigation. The investigation is scheduled to start on 11th October and will have the following objectives.
- The investigation would focus on exploring how the digital Euro would be distributed to individuals and businesses.
- It would explore the impact of the digital Euro on the European market and any legislative changes required to facilitate the creation and use of the digital Euro.
- It will ensure that the digital Euro will not jeopardize the existing banking system.
Legarde cited the above factors to explain why the ECB decided to put a 2-year time frame on the investigation. She also clarified that cash would continue to be available.
Central Banks Around the World Exploring CBDCs
Currently, several central banks the world over are exploring the use of CBDCs and planning to integrate them into the financial system. Jamaica’s National Commercial Bank (NCB) announced that its CBDC would be available from as early as September, with the bank scheduled to receive its allotment of the CBDCs next month.
Ghana’s central bank has also announced its own plans for a CBDC and has signed a contract with Giesecke+Devrient to run a pilot CBDC program under the country’s new cash-lite initiative.
Meanwhile, Nigeria’s central bank has also set the ball rolling and has sent a presentation about the e-Naira project to all Nigerian banks and has also issued guidelines and for the proposed digital currency. The presentation sent to banks reveals the design and the operational module of the e-Naira.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.