The initial stage of the project is expected to last 24 months.
ECB Investigating Possible CBDC
The European Central Bank is taking steps towards developing a digital euro.
The ECB published a statement Wednesday, confirming its plans to launch a digital euro project. It will open with a 24-month “investigation phase,” placing particular focus on design and distribution. The announcement noted that any central bank digital currency the ECB develops would need to “prevent illicit activities” and maintain financial stability. It also noted that a digital euro would serve as a complement to cash, rather than a replacement.
Christine Lagarde, president of the ECB, said of the update:
“It has been nine months since we published our report on a digital euro. In that time, we have carried out further analysis, sought input from citizens and professionals, and conducted some experiments, with encouraging results. All of this has led us to decide to move up a gear and start the digital euro project.”
Lagarde has discussed CBDCs and the broader cryptocurrency space on many occasions in the past. In January, she said that Bitcoin was “speculative” and needed regulation. In respect to a digital euro, she said in March that the ECB could launch its own CBDC by 2025.
The ECB is not the only major bank looking into developing its own CBDC. The Coronavirus pandemic and subsequent explosion in the digital assets space have acted as catalysts for countries to explore CBDC adoption, with China, Indonesia, Ghana, Sweden, Japan, the UK, and the UAE among those exploring the possibilities of launching their own digital money.
The United States will also begin research into the topic this summer. The Fed’s chair Jerome Powell announced that the central bank would publish a paper discussing “technological advances driving rapid change in the global payments landscape,” adding that it would focus on the potential drawbacks and benefits of a CBDC. Powell also said that the Fed would ask for input from the public and elected officials.
