By: Eliza Bennet
The European Central Bank (ECB) has announced the progression of a digital euro project to the preparation phase. However, the bank has also clarified that this development does not guarantee issuance of a digital euro. The preparation phase, set to commence in November, is projected to last two years. This phase aims to establish regulations for the digital euro and identify potential issuers who can construct the necessary technological infrastructure.
During the preparation phase, the ECB will engage in tests, experiments, and initiate discussions with the public and stakeholders. The ECB mentioned that a digital euro could find use across the euro area for peer-to-peer, government, and retail transactions. The unique selling point for the digital euro, as per ECB, is that no present digital payment instrument offers low costs, instant settlement, high privacy, and accessibility.
While the ECB is exploring the use of blockchain and related technologies for the project, the digital euro will not be considered a cryptocurrency due to its backing by a central body, unlike other cryptocurrencies. Privacy and data protection are priority areas for the ECB, and any digital euro would provide users with 'cash-like privacy' with no access to personal details for the Eurosystem.
Notably, the project's development does not guarantee the bank's commitment to issuing a digital euro. The ECB indicated that its Governing Council would have to make the final decision regarding the issue of a digital euro once the European Union finishes its legislative process.
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