On October 18, the ECB Governing Council stated that it had decided to move to the next phase of the digital euro project.
The move into the preparation phase for a potential European CBDC follows the completion of a two-year investigation phase.
The preparation stage will start on November 1 and will initially last two years. It will involve finalizing the digital euro rulebook, selecting technology providers, and testing.
Our Governing Council has decided to move to the next phase of the digital euro project.
In November 2023 we will start laying the foundation for the possible issuance of a digital euro. A decision on issuing a digital euro will come at a later stage.https://t.co/xuKklame0U pic.twitter.com/Nn0Z8RggVn
— European Central Bank (@ecb) October 18, 2023
Digital Euro in Two Years?
After the preparation phase, which is due to be finalized at the end of 2025, the ECB will decide whether to move forward with actually issuing a CBDC. This decision would come only after the EU legislative process is complete, which is likely to take it into the following year.
“The launch of the preparation phase is not a decision on whether to issue a digital euro,” it confirmed.
Ultimately, the EU’s legislative bodies – the EU Parliament and the Council of the EU (member states) – will decide whether a digital euro will be launched or not, said Circle’s Director of EU Strategy and Policy, Patrick Hansen, who added:
“A legislative process is currently ongoing and discussions on the EU Commission proposal have already started, but it will probably take some time (until after the EU elections in June 2024) until the EU institutions will vote on the topic.”
The proposed digital euro would be a digital form of cash, allowing private offline payments. It would be widely accessible, free for basic use, and offer the highest privacy standards, according to the announcement.
“We need to prepare our currency for the future,” said Christine Lagarde, President of the ECB, before adding, “It would coexist alongside physical cash, which will always be available, leaving no one behind.”
Users would be able to access digital euro services through banks or a “Eurosystem” app. Those without bank accounts could use a card from a public entity like a post office.
CBDC Latest Outlook
Earlier this month, the Bank for International Settlements (BIS) and the central banks of France, Singapore, and Switzerland announced the successful completion of a new CBDC initiative called Project Mariana.
According to the Atlantic Council CBDC tracker, 11 countries have deployed a CBDC, most of them in the Caribbean aside from Nigeria.
Nevertheless, several US senators are vehemently opposed to a CBDC, claiming that it will erode financial privacy and enable state surveillance.