The European Central Bank (ECB) has made a significant stride towards the launch of a digital version of the euro, a move that could enable the residents of the 20 countries sharing the single currency to execute electronic payments both safely and at no cost.
The ECB announced that starting 1st November, it would initiate a two-year preparation phase for the digital euro. This phase will involve finalising regulations, selecting its private sector partners, and undertaking tests and experiments.
“After the two-year period, we will decide on advancing to the next phase of readiness, paving the way for a potential future issuance and rollout of the digital euro,” stated the ECB.
While this decision is but a small step in a multi-year initiative, it places the ECB ahead of other Group of Seven (G7) central banks and might set a precedent for others to follow.
Various Caribbean nations and Nigeria have already launched digital currencies, with China and Sweden among those who have embarked on pilot schemes.
However, institutions like the US Federal Reserve, the Bank of England, and the Bank of Canada have exhibited more caution towards such ventures.
Research suggests that central banks representing a fifth of the global population are likely to release their digital currencies within the next three years.