The European Central Bank presented digital euro design for its 25th anniversary
The European Central Bank is preparing a project for a digital version of the euro. According to the ECB President Christine Lagarde, this is a response to pressure from emerging technologies that could change the way money is used over the next decades of the bank's operations, the Associated Press reports.
The ECB President Christine Lagarde also said that the digital euro can offer people a way to buy things, regardless of payment service providers that are controlled by non-European companies. These may include Mastercard, Visa, Apple Pay, and Google Pay.
The ECB officials say the European Commission will offer a legislative framework for the idea over the next few weeks, while the central bank will release a detailed digital currency design proposal in October.
Central banks around the world, including the US Federal Reserve, are cautiously exploring digital currencies as cash increasingly gives way to electronic payments. Some smaller countries, such as Nigeria, the Bahamas, and Jamaica, have already introduced digital currencies. China conducts test launches.
Central banks are also responding to the emergence of cryptocurrencies and fear that one day people may turn to competing forms of digital money that will undermine national currencies.
The digital currency, backed by the central bank, would be a safe and stable means of payment, unlike the volatile cryptocurrency, whose falling prices over the past year and the collapse of exchanges such as FTX have prompted calls for regulation.
The EU has become a world leader by finally approving rules for the free crypto sector last week.
As Europe considers its own central bank-based digital currency, the big question is, how will it improve what is already available to consumers?
"No one can answer this question, not even the ECB," said Philipp Sandner, the Head of the Blockchain Center at the Frankfurt School of Finance and Management.
Apple Pay, for example, lets people buy their morning coffee and anything else by double-tapping on their phone, a seamless experience that digital euros should match.
"You have to be at least as good as Apple Pay and Mastercard, which is difficult, otherwise people won't use it," Sander said.
The ECB provides a digital euro for retail use, which can even be transferred offline using a digital wallet on people's phones. Early projects require a standard program, as well as use through existing online banking programs. This will not replace cash, but it will add a different way to store euros.