The European Central Bank (ECB) has revealed it is set to begin a two-year long investigation into the possibility of launching a digital euro.
According to the ECB, the investigation phase will involve the Eurosystem focusing on a potential functional design that is based on users’ needs. The investigation will include prototyping, focus groups and conceptual work.
Furthermore, the project will also reveal potential changes to the EU legislative framework that may be needed and will assess the possible impact of a digital euro on the market, identifying the design options to ensure privacy and avoid risks for Euro-based citizens, intermediaries and the wider economy.
The bank also mentioned that experimental work conducted by the ECB over the last nine months has found no major obstacles to any of the assessed design options for both the Target Instant Payments Settlement System and alternatives such as blockchain.
ECB president Christine Lagarde said, “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. Our work aims to ensure that in the digital age citizens and firms continue to have access to the safest form of money, central bank money”.”
ECB board member Fabio Panetta added, “In concrete terms, this [investigation] means that we will commit the resources necessary to design a marketable product. But a decision about whether or not to issue a digital euro will only come at a later stage. And in any event, a digital euro would complement cash, not replace it.
“Our aim is to be ready, at the end of these two years, to start developing a digital euro, which could take around three years.”
A consultation conducted by the ECB found privacy would be valued most in consideration of a potential future digital euro. The bank received over 8,000 responses to its consultation, with 43% of respondents citing privacy as the most valuable feature of a digital euro.
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