The European Central Bank to Commence Preparation for Digital Euro
The European Central Bank (ECB) has taken another step toward launching the digital version of the Euro, allowing Eurozone residents to make secure and cost-free electronic payments. This information has been reported on the ECB's website.
The ECB has announced that it will commence a two-year 'preparatory phase' for the digital Euro on November 1, during which it will finalize regulations, select private sector partners, and conduct 'testing and experiments.'
The digital Euro aims to address the shortage of European payment service providers. To make the digital Euro compatible with digital currencies from other central banks, the ECB is closely cooperating with the central banks of the United States, the United Kingdom, Switzerland, Canada, Japan, and Sweden.
The digital Euro will be distributed by the ECB, commercial banks, and digital wallet providers. It will be available to Eurozone residents as well as foreign citizens.
'In two years, the Governing Council will decide whether to proceed to the next level of preparation, paving the way for a possible issuance and introduction of the digital Euro,' the ECB statement read.
While today's decision represents a small step in this extensive project, it positions the ECB ahead of other G7 central banks and could serve as a model for emulation. Several Caribbean countries and Nigeria have already launched digital currencies, and China and Sweden are among those developing pilot projects. However, the Federal Reserve, the Bank of England, and the Bank of Canada approach such projects with more caution.
The ECB argues that the digital Euro will introduce competition to the payment market, which is currently dominated by American companies.
The ECB has also clarified that there will be a limit on the amount of digital Euros that an individual can hold, and the regional limit will likely be set at 3,000 Euros.
In May, The Gaze reported that the European Central Bank unveiled the design of the digital Euro for its 25th anniversary.
In June, the European Union proposed measures to enhance competition in the payment services sector by providing legal support for the digital Euro, ensuring its acceptance as a means of payment.