Banco de España has joined a growing number of European banking institutions in advocating for the adoption of a digital euro. The central bank released a statement on October 19 explaining the concept and potential applications of the European Union’s prospective central bank digital currency (CBDC).
Digital Euro: The Modern Alternative
The statement underscores the limitations of physical cash in fully leveraging the benefits of a digitally-driven economy and society. In contrast, the digital euro is positioned as a transformative element that would vitalize electronic payments within the financial ecosystem.
The authors of the statement emphasize the potential for offline payments with the digital euro while highlighting its privacy features, akin to physical cash. They assure that in its online form, user data would remain accessible only to their financial institutions, not the CBDC infrastructure provider, Eurosystem.
Project Timeline and Decision-Making
The provided project calendar outlines the “preparation phase,” which began on October 18 and is scheduled to conclude by 2025. Nevertheless, the definitive decision regarding the issuance of a pan-European CBDC remains pending.
The Bank of Finland has expressed similar enthusiasm for the digital euro, with board member Tuomas Välimäki describing it as the most pertinent project in the European payment sector. The European Central Bank (ECB) has also embarked on the “preparation phase” for the digital euro, focusing on finalizing rules and selecting potential issuers.
“Easier Life” and “Stronger Europe”
On October 25, the ECB provided a link to a dedicated landing page with fundamental information about the digital euro. The ECB’s pitch revolves around promising an “easier life” and a “stronger Europe” through the adoption of this digital currency.
The collective support from European central banks underlines the significance of the digital euro in modernizing and enhancing the efficiency of the financial landscape while preserving individual privacy.