A new digital currency called “Digital Euro” in coordination with the European Central Bank (ECB) is planning to launch in Europe in the future. With a mission to improve the payment systems all over Europe much cheaper and faster to send and receive payments through digital euro. Reports state that De Nederlandsche Bank (DNB) in Netherland is one of the testing countries for the digital euro project. The bank has released a report of 45 pages showing that the Netherlands is ready to play a huge role in the research and the development of digital euro.
The digital euro is coming but it does not tend to replace physical cash, but its main purpose is to make the payments easier and faster. It would interact with banks and it would allow people to send or receive money into many countries by an account of a commercial bank. By using “Digital Euro” people would have more alternatives for payments and force banking systems to be more competitive. Physical currency usage is declining and has created the need for finding new alternatives for payments. A digital solution would help people to avoid using physical cash in a crisis where businesses wouldn’t accept physical cash as payment.
Major European countries as France and the Netherlands are looking for a digital system of payments. France is already experimenting with tests using a new system and the Netherlands is becoming more confident in adopting digital payments with more than 50% of payments completed according to a recent study report. Experimentation by central banks with Central bank digital currency (CBDCS) will occur more often this year into different European countries.
With the upcoming launch of Facebook’s cryptocurrency Libra, the European ministers have called for not accepting Libra in Europe due to concerns of risk it could pose. The report of the Netherlands Bank (DNB) noted that the upcoming cryptocurrency Libra could be one of the reasons why the European Central Bank (ECB) is considering launching its own digital currency. The Association of German Banks recently has said that creating a digital currency would help the financial system development. The Association is considering Blockchain and cryptocurrency technologies as “base” for the upcoming “Digital Euro”.
By using “Digital Euro”, it would allow banks to handle financial operations faster without third parties. Implementing a cryptocurrency into their ecosystem would lead to many benefits for banks and consumers. And it would protect consumer’s personal data with Blockchain technology and supplying a more secure system of payments. Going cashless would also fight off infection from the recent covid-19 due to paper serving as a source of spread. The ECB wants to create a new alternative of payment that would lead to quicker and cheaper payments into many countries.
When will Digital Euro launch?
The Association of German Banks, which stands for 200 banks in the country has been calling for a programmable digital euro system. The group believes that the European Union should catch up with the adoption of digital payment systems. But, the head of Bundesbank Jens Weidmann says euro it’s a proven stability currency for decades and believes it’s too early to introduce a digital currency. There are concerns about how digital currency issued on banks would work and showing that could cause a crisis financial situation of banks. The competition of the digital euro would be the digital dollar and digital yuan which is also trying to get released in 2020.
Weidmann believes that the currency blockchain system, is more different than a centralized system with interbank payments between central banks and commercial banks. But, with China reportedly preparing to launch a digital yuan could force the major economies to consider doing the same. Several central banks last year have done researching of Central bank digital currencies (CBDCs) for a digitalized payment system. So back to the question is the digital euro coming and the answer to that is quiet possibly in the near future.
Images via Shutterstock, Writer Behar H.