“Europe is increasingly turning to digital technology in ways of spending, saving and investing,” said Christine Lagarde, president of the European Central Bank, in a statement Friday.
“Our role is to ensure confidence in money, and that means making sure that the euro is suitable for the digital age. We must be fully prepared to issue a digital euro, if the need arises,” said Lagarde.
The digital euro will be similar to the bitcoin currency, but it will be subject to censorship, unlike cryptocurrencies.
Cryptocurrencies use a technology known as chain of encrypted digital data, which consists of blocks or files carrying transaction data. The Euro based on this system will exist in electronic form and will be made available for online transactions.
An important initiative
Early last September, the President of the European Central Bank said that such an initiative may be vital to ensure that the single European currency area does not lag behind the movement of digital currencies and global changes in payment systems.
She added that new technology could improve the efficiency of financial transactions and put Europe at the cutting edge of innovation, but it also poses risks.
The European Central Bank President stated that while it is not necessary to worry about foreign electronic payment services companies dominating the market in Europe, the evolving global context and the increase in protectionist policies raise new risks that threaten to disrupt transactions.
This comes as the European Commission seeks to intensify its fight against tax evasion in the digital world within the European Union.
The European Commission – the executive arm of the European Union – said that tax evasion resulted in a loss of revenue of 46 billion euros ($ 53 billion) in the European Union in 2016.
Control of electronic money
A study issued by the European Central said that the digital euro will help in the event that citizens give up cash and control external images of electronic money, or in the event that the rest of the payment methods are not available.
European Central Bank member Fabio Panetta said today that the bank should prepare for a digital euro issue that complements the securities “if and when” necessary “.
Major central banks around the world are considering digital versions of their currencies in response to demand for electronic payments and to counter competition from private currencies such as Bitcoin and Facebook’s proposed currency, Libra.
“We should be keen to release a digital euro if and when developments around us make this necessary,” Panetta said in a post in the author’s blog.
French model
On May 20, France became the first country to successfully test the digital euro, which works on the blockchain, as the Bank of France tested the sale of securities in the central bank’s digital currency (CBDC) on May 14.
The French bank indicated that the pilot program focused on wholesale rather than retail uses of the digital euro.
The digital currencies of individual central banks will be open to ordinary consumers, while the digital currencies of the wholesale central banks will be the preserve of banks and institutional actors – the French central bank said.
It is known that the Bank of France is particularly active in developing the digital euro. Until the UK leaves, France will become the second largest economy in the eurozone, after Germany.
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