The Strategist

ECB approves pilot project on digital euro

07/15/2021 - 04:27

The European Central Bank has launched a pilot project to create the digital euro.

The European Central Bank (ECB) has decided to launch a pilot project to create the digital euro. This is reported on the ECB website. This does not prejudge any future decision on the possible launch of the digital euro, which will be taken later, the release notes.

A study of the digital euro will be conducted over a 24-month period, the release said. During this period, the developers plan to focus on the issue of a functional design based on user needs. 

The digital euro should meet all the needs of Europeans, while contributing to the prevention of illegal activities and without having an undesirable impact on financial stability and monetary policy, the report said. The digital euro is being created to complement conventional money, not replace it, the ECB stresses. 

Experiments conducted by the ECB and eurozone banks over the past nine months will help with the study of the digital euro, the report says. These experiments have suggested that creating an architecture that combines centralised and decentralised elements is possible. They also showed that the digital euro infrastructure would be environmentally friendly, the ECB notes. It stresses that the energy expended by the currency is negligible compared to that required by Bitcoin. 

The digital euro will allow users to pay without the use of coins and banknotes. Discussions about the project began as Facebook was planning to launch its own currency, CNBC noted. Negotiations on this topic became more active during the pandemic, when more people began to buy goods online, the publication points out.