The current global outbreak of coronary pneumonia has undoubtedly become a catalyst for accelerating the development of digital currencies, with many fearing that the virus could spread through banknotes and coins, and that even many countries accustomed to cash transactions have accelerated the transition to contactless payments.
In this context, the European Union has to follow the trend of The Times, the introduction of the EU’s version of digital currency, “digital euro” on the agenda.
The ECB is stepping up preparations for a digital euro in part because the European Union is making an ambitious economic and social digital transition and has put the digital euro at the top of its strategic priorities. Sovereign digital currencies will undoubtedly be a specific focus of the European Data Strategy released earlier this year.
The European Central Bank (ECB) on Monday launched a three-month public consultation on the “digital euro” and a half-year experiment as the coVID-19 outbreak has prompted many major central Banks to invest in developing digital currencies. The European Central Bank wants to decide by the middle of next year whether to launch the digital euro project.
According to media reports, the European Central Bank published a report earlier this month announcing its digital euro development plan. The report says that the digital euro could provide a secure form of money for eurozone citizens in a rapidly changing digital world, and that if the role of cash as a means of payment declines significantly, the digital euro should be an effective response to support the digitisation of the European economy and the strategic independence of the EU.
On the other hand, there is a growing sense of urgency on the part of the ECB in the context of the accelerated distribution of digital currencies by central banks and competitive pressure from non-governmental digital currency projects such as Facebook Libra.
At the same time, the digital euro can also serve as a new channel for monetary policy transmission, thereby reducing the risk of conventional payment services, improving the international status of the euro, improving the currency and total cost of the payment system.
On the face of it, a digital euro is not much different from checking a bank account through an app. In theory, however, payment procedures for digital euro would be different and could speed up transactions at a lower cost. Although the European Central Bank has not yet released a timetable for the launch of the digital euro, the fact that the encrypted digital euro has entered the experimental stage marks the coming age of the digital currency in Europe, the report said.
Christine Lagarde, president of the European Central Bank, said the European Central Bank was “very serious” about creating a digital euro and was ready to try to issue a virtual euro currency in October and integrate it into its virtual wallet, Reuters reported. However, they stressed the need for some guarantees to protect the banking system and the economy before the digital euro is available to the public.
Since savers may earn more in digital euro than they do at Banks, if deposits fall, Banks will end up charging more for loans, potentially slowing the economy. As a result, the ECB is considering increasing limits on the number of digital euro that anyone can own or receive.
At this point, the ECB will set up a base to automatically monitor the owners of each digital currency or to establish rules to decentralise the monitoring of digital transactions that are captured like Bitcoin through blockchain technology.
In other words, once the digital currency, the euro, has started to circulate, the ECB can fully control the flow of money, facilitate the process of producing statistical currencies, strengthen the monitoring and monitoring of economic activities, achieve specific political control purposes, realise the large financial data, achieve a high level of transparency in economic activities, so that tax evasion, money laundering, corruption and other economic criminal activities are nowhere to be escaped.
The digital euro, an electronic euro issued by the European Central Bank, has legal status such as euro banknotes or coins, and related assets can be deposited with the European Central Bank or stored on platforms such as e-wallets.
In view of the new crown epidemic and the economic recovery, Member States seem to be interested in the digital euro at the moment. Despite the increasingly clear strategic direction, Europe is still a long way from adopting a sovereign digital currency, and frequent consultations, consultations and debates are inevitable.