FRANKFURT (Reuters) -The European Central Bank took a first step on Wednesday towards launching a digital version of the euro, part of a global drive to meet growing demand for electronic means of payment and tackle a boom in cryptocurrencies.
An electronic equivalent of banknotes and coins, the digital euro will likely be a digital wallet that euro zone citizens can keep at the ECB rather than a commercial bank.
The ECB's Governing Council on Wednesday formally gave the go-ahead to the investigation phase of the project, which should last 24 months and be followed by three years of implementation.
The main aim of the initiative is to avoid leaving digital payments to the private sector, particularly if the use of physical cash starts dwindling, like it has in Sweden.
"Our work aims to ensure that in the digital age citizens and firms continue to have access to the safest form of money, central bank money," ECB President Christine Lagarde said.
The ECB will now start working on the design of the digital euro, consulting with stakeholders ranging from banks to retailers.
It will also start talks with European Union lawmakers to seek legislative changes that may be needed because the digital euro was not foreseen by EU Treaties.
"A discussion by the end of this year on policy objectives and uses of a digital euro - also taking into account the global context - could be a good starting point," ECB board member Fabio Panetta told an EU lawmaker in a letter accompanying the decision.
The ECB will now also define the role for banks and fintechs, which will probably offer digital euro wallets to customers on the ECB's behalf.
Commercial lenders have already ramped up efforts to influence policy and technical plans to secure a slice of the market.
The ECB already conducted experiments in the past year, finding "no major technical obstacles" with the digital euro's ledger, its privacy and safety and offline use.
Work on a digital euro accelerated after Facebook unveiled plans to create its own currency in 2019, a potential threat to central banks' core business.
(Reporting By Francesco Canepa; Editing by Andrew Heavens and Alison Williams)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU