The European Central Bank (ECB) has revealed new updates into the development of its potential native central bank digital currency (CBDC); the Digital Euro.
Figureheads from the ECB were present at the University of Milano-Bicocca for the Crypto Asset Lab Conference last week, where the event was the foundation for wider discussions on CBDCs and the Digital Euro in particular.
Key to the reason why the Digital Euro is in development is due to the current lack of digital means of payments covering all European Union member nations. According to the ECB, 13 of the 20 Euro area countries do not have a national card scheme and rely on international card schemes.
Another interesting factor is the ECB’s belief that there is a shortage of European financial service providers offering payment solutions at the European level. The central bank cites an influx of new foreign payment solution providers and the increasing traction of cryptocurrency-related assets, like stablecoins, as a reason to introduce a European CBDC.
The ECB works closely with the Eurosystem in being able to foster new and innovative methods of payment for EU countries and its citizens. This has been evident with the development of the instant payment rail SEPA Instant.
Recognising the overwhelming shift to digital payments, a Digital Euro would be a new, faster method of currency to facilitate payments across the continent, with the ECB stating it would be “available to everyone and accepted everywhere in the Euro area”.
Piero Cipollone, Member of the ECB’s Executive Board, detailed the progress of the digital euro project, stating: “In a rapidly changing world, Europe cannot afford to stand still.
“Without integrating central bank money into the digital landscape, we risk limiting Europe’s competitiveness, resilience, and strategic autonomy. The Digital Euro could advance the single market for payment services, enabling private providers to enhance global outreach, diversify their offerings, and improve cost efficiency and competitiveness on the international stage.”
In a bid to accelerate the adoption and rise of any potential Digital Euro, the ECB stated that it will leverage the multi-currency feature of the Eurosystem’s instant payment settlement service TIPS. This is in order to settle end-to-end funds for central bank money.
Overall, the central bank is aiming to support the creation of a pan-European payment solution, bolster instant payments, and explore new technologies that support payments – such as Distributed Ledger Technology – in preparation for the issuance of a Digital Euro.