Prototype of the digital euro completed - decision on the introduction in autumn 2023

Prototype of the digital euro completed - decision on the introduction in autumn 2023

The prototype of the digital euro is completed. Nevertheless, there are still concerns about the digital central bank currency. Bundesbank board member Burkhard Balz recently commented on the opportunities and risks of the digital euro.

Decision to introduce the digital euro will be made in autumn 2023

The prototype of the digital euro, which was developed by the European Central Bank (ECB), recently took an important hurdle. According to reports, the digital euro has been successfully tested and the second test phase was completed. In contrast to decentralized cryptocurrencies such as Bitcoin and Ethereum, the digital euro is a central bank currency controlled by the ECB, which is intended to serve as a supplement to cash. In addition to various fintech companies, the US group Amazon also participated in the tests. The project was originally created for a possible introduction of the digital central bank currency in the entire EU between July 2021 and autumn 2023. In autumn, the decision should now be made as to whether the digital euro is introduced or the project will be discontinued. ECB director Fabio Panetta, however, explains that an introduction of the digital euro would not be possible until autumn 2026. He also emphasizes that the digital euro should only complement the cash and not replace.

Criticism for the digital euro

Despite the assertions of the ECB that the cash should not be abolished, there are still critics and skeptics with regard to the digital central bank currency. In addition to the fear of the availability of cash, the lack of data security of the digital euro is also viewed critically. Privacy should be better protected, especially in online payments, as Deutschlandfunk reports. Ramona Pop, the director of the Federal Consumer Center, explains that the EU must improve its data protection guidelines so that the digital euro stops collecting data. Anonymity when paying digital is important.

Burkhard Balz about the digital euro

Bundesbank board member Burkhard Balz recently commented on the opportunities and risks of the digital euro. In a speech at the School of Economics, he dealt with the role of the digital central bank currency, as the IT financial magazine reports. Balz emphasized that many countries have already carried out pilot projects for digital central bank currencies and some countries had already introduced one. Nevertheless, there is no standard solution for the introduction of a digital central bank currency. It is about ensuring both control over payments and independence from international digital companies, especially from the USA. It is important to discuss the dependencies of states and central banks from these companies. Balz found that the trend towards digital payment solutions could increase and that a currency system could answer and offer alternative concepts. A digital euro would receive access to safe central bank money for everyone in digital space. If the use of cash for payments continues to decrease, this will endanger the role of public money, the cornerstone of our monetary system. The convertibility of private money in public money is an important cornerstone of our two -stage monetary system, emphasizes Balz.

The success of the digital euro depends on some framework conditions. This includes widespread usability without unwanted side effects. The digital euro should be universally applicable in both shops and between private individuals and in e-commerce. In order to achieve all consumers, a wallet and a physical map would be necessary as manifestations of the digital euro. Balz explains that the Eurosystem does not intend to become a commercial bank for 340 million European citizens. Instead, the long -term expertise of the banking sector should be used to preserve the traditional roles in the monetary system, with the central bank in the background and banks and payment service providers at the customer interface. In addition, the digital euro must be introduced in such a way that it could be expanded to include further and new future -proof business models. This requires a future -proof infrastructure.

Balz also emphasized that security and data protection play a central role in the introduction of a digital central bank currency. The trust of the population and the protection against fraud are crucial. Personal data should therefore only be limited and processed with strict compliance with the data protection laws. In conclusion, Balz emphasized that the success of the digital euro is not a matter of course and that a rigorous analysis and openness for such a fundamental technological change as the introduction of digital central bank currencies is necessary.

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