Banco de España, Spain’s central bank, has enthusiastically embraced the concept of a ‘digital euro’. This strategic shift aligns with the broader trend among European banking institutions, all geared up to enlighten their patrons about the potential advantages of a digitalized European Union central bank digital currency (CBDC).
Understanding the Digital Euro
Published on October 19, the central bank’s concise text outlines the nature and multifaceted uses of the digital euro. According to the bank, the traditional physical cash format falls short in harnessing the myriad advantages presented by the ever-growing digitalization of our economy and society.
Moreover, the narrative has taken a decisive turn. It emphasizes that the digital euro is poised to elevate electronic payments to a pivotal role within the financial ecosystem.
One standout feature highlighted by the authors is the potential for offline payments with the digital euro. They underscore its privacy levels, equating it to the anonymity provided by cash transactions. The authors also reassure users that, in its online form, their data remains visible only to their respective financial institutions, not to the CBDC infrastructure provider, Eurosystem.
Key Milestones and Echoes of Support
Detailing the roadmap in the text, the current “preparation phase,” initiated on October 18, is expected to conclude by 2025. However, the ultimate decision on the issuance of a pan-EU CBDC is still pending.
The Bank of Finland echoes a similar sentiment. Further, board member Tuomas Välimäki labeled the digital euro as “the most topical project” in the European payment sector. This convergence of support is indicative of a broader movement within the European banking community towards embracing the digital revolution.
European Central Bank’s Stance
On October 25, the European Central Bank (ECB) shared a link to a dedicated landing page providing fundamental information about the digital euro. Promising an “easier life” and a “stronger Europe,” the ECB’s endorsement reinforces the transformative potential of a digitalized currency system.
In an earlier announcement in October, the governing council of the ECB declared the initiation of the “preparation phase” for the digital euro project. A two-year endeavor, this phase will focus on finalizing regulations for the digital currency and identifying potential issuers.