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Officials have hinted at renewed efforts to advance the technology in line with other jurisdictions now in pilot phases. Critics remain defiant, highlighting the potential complications and risks associated with traditional finance.
Digital Euro Prep enters a new phase
According to the ECB, the next phase to achieve the digital euro is already underway and requires the appropriate regulatory framework. The bank recently concluded the initial preparation phase, which began in 2023, and has set new dates to achieve future milestones. If the legislation is in place by 2026, a pilot phase could begin in 2027.
However, the first issuance is planned to begin in 2029, and the central bank digital currency (CBDC) will be distributed to consumers. The bank began working on the digital currency in 2020 to compete with the growth of private cryptocurrency assets and provide users with more payment options. A key milestone achieved so far is the selection of the digital euro service platform.
“The sourcing process encompassed both externally and internally acquired components. Abroad, the European Central Bank (ECB) launched tenders for five components of the DESP; The basic settlement and issuance components were obtained within the Eurosystem. “Five external suppliers were selected and all signed framework agreements.” the bank wrote.
ECB Board Member Piero Cipollone reiterated the importance of CBDC for everyday payments amid negative reactions from critics. Benefits include low-cost transactions, multiple options, and an opportunity to innovate within the ecosystem. In a recent advertisementThe bank stated that it will complement cash and ensure that users have access to public and reliable means of payment.
On the other hand, pro-cryptocurrency commentators have criticized the CBDC, describing the technology as a tool to promote government control. This sparked the global debate between CBDCs and stablecoins, with most governments backing the former. Aside from government control, critics have also expressed concerns about privacy.
Authorities prefer CBDCs because they give them the power to limit the impact of Bitcoin and other cryptocurrencies. Additionally, the question of jurisdiction and the issuance of stablecoins arises, since the dollar backs most assets. This year, several countries introduced positive legislation to regulate national stablecoins under their control.
This followed global institutional interest in stablecoins in the same period. Banks and other corporations establish joint collaborative efforts to scale cross-border financing, thereby reducing costs.
