All news is rigorously fact-checked and reviewed by leading blockchain experts and seasoned industry insiders.
- The European Central Bank is stepping up its effort to launch the much anticipated CBDC (digital Euro) as its necessity sparks massive debate.
- Josh Lipsky of the global CBDC tracker at the Atlantic Council has stated that the entire process of the digital Euro implementation could inspire other countries to consider its adoption.
Central Bank Digital Currency (CBDC) is appealing to the global economy as central banks worldwide seek to revolutionize their traditional systems. According to a report, 130 countries, representing 98 percent of the global economy are exploring digital cash. Just recently, it was reported that the European Central Bank is doubling down its effort to launch a digital Euro to enable users in 20 countries to use a common digital currency for transactions.
According to the bank, a two-year preparation phase would start on November 1. As part of this exercise, some private sector institutions would be chosen to embark on testing and experimentations.
After two years, the Governing Council will decide whether to move to the next stage of preparations, to pave the way for the possible future issuance and roll-out of a digital euro.
This groundbreaking effort could make the ECB the first renowned Western central bank to carry out this development. Over the years, CBDC has been seen as a better alternative to traditional payment systems with more potential to address the existing challenges. It is expected to modernize the existing system with new functionality and to ensure that the physical cash is replaced.
More on the CBDC Global Implementation
According to Josh Lipsky of the global CBDC tracker at the Atlantic Council, the exploration of the ECB is being watched and could influence how other countries approach it.
Is a very big deal, and a lot of the rest of the world is watching this closely. It is one of the biggest central banks, so if it comes up with answers to the privacy and cyber security issues and the ability to use it offline, it will be very influential.
One of the prominent figures optimistic about the breakthrough of CBDC is Fabio Panetta, the ECB Executive Board member. According to him, this digital currency would help future-proof currency reduce over-reliance on payment systems of credit cards based in the US. Unfortunately, several concerns have been raised about why CBDC has uptake low in countries that have adopted it including Nigeria.
According to a paper published by the International Monetary Fund (IMF) in May, Nigeria’s e-Naira has 98 percent of its wallets never used. Its Central Bank believes that the adoption of the digital naira is simply reflective of the early stages of CBDC awareness. The Bahamas launched the world’s first digital currency in 2020. Data discloses that the first seven months of the year saw an 11 percent decline in personal transactions.
The US Federal Reserve and the Bank of Japan have not yet made any clear move towards the launch of these digital currencies as some key members think the CBDC addresses challenges that are already being addressed by the systems already in existence.
Barclays’ managing director of advanced technologies, Lee Braine commented on this:
It’s not yet clear what the thing is that could be done with a retail CBDC that couldn’t also be replicated with commercial bank money. You are potentially breaking some of the singleness of money.
With the rising exploration of CBDC, the demand for privacy coins such as Monero, Dash, and ZCash has been on a different level.
