FRANKFURT - As technology evolves, there has been an increase in the digitalization of services and products, and digital currencies are a very prominent example of how digitalization can have a profound impact on a sector. The European Central Bank (ECB) has been exploring the idea of issuing a digital euro for quite some time.
Digital cryptocurrencies like Bitcoin are widely available globally, but this is not yet the case for country-specific currencies, but some countries - including China, the United States, and the United Arab Emirates - are implementing digital currency pilot projects. For Europe, the aim of a digital euro would be to modernize the eurozone's financial system and keep pace with the rapidly evolving digital economy.
While the proposal has generated a lot of interest, it has also raised concerns about privacy, civil rights, and the potential impact on the banking sector. With other major global currencies updating their payment infrastructures, Europe must not delay in implementing its own central bank digital currency (CBDC). However, it must also be designed adequately: A rushed and flawed digital currency would do more harm than good. The ECB’s digital euro is only one aspect of this. Euro-denominated stablecoins are equally important. Looking at the US dollar, USD stablecoins already exist and boast a daily trading volume in the tens of billions.
The digital euro is a digital form of the euro issued and backed by the ECB, making it central bank money - holders of this money own a claim against the central bank. In general, the euro can be provided to various entities such as banks, companies, and individuals or other end users. The ECB has already drafted a concept for the digital euro, but it has not yet decided to actually launch it. For now, the digital euro primarily targets EU residents, and thus it can be classified as a retail CBDC. The ECB seeks to provide a novel payment method, but it aThe content herein is subject to copyright by The Yuan. All rights reserved. The content of the services is owned or licensed to The Yuan. Such content from The Yuan may be shared and reprinted but must clearly identify The Yuan as its original source. Content from a third-party copyright holder identified in the copyright notice contained in such third party’s content appearing in The Yuan must likewise be clearly labeled as such.