European Union says digital euro legislation coming in early 2023
The European Commission has officially announced that a bill for a digital euro would be up on the Parliament in 2023.
First reported by Politico, the European Commission finance chief Mairead McGuinness has officially disclosed the European Union formally considering a digital euro legislation.
McGuinness said at a fintech conference this week that their goal is “to table legislation in early 2023,” with a targeted legislative consultation being constituted “in the coming weeks.”
The European Central Bank (ECB) has reportedly already been conducting experiments with designs and systems for a digital euro, and the prototype is expected sometime in late-2023.
If a digital euro gets the nod for implementation, it would also require the seal of approval from Eurozone governors. Once the government execs give a green signal, then the digital euro could be ready for issuance by the year 2025.
The digital euro is a central bank digital currency (CBDC), a newly emerging financial instrument that central banks around the globe are exploring very seriously. The increased interest in CBDC’s has come from growing concerns that domestic currencies would eventually be undermined by the growing popularity of cryptocurrencies.
ECB’s Executive Board member Fabio Panetta had said last year in November while pushing for the implementation of a digital euro that “If we don’t satisfy this demand, then others will do it.”
The ECB had conducted research and published a report on digital currencies in 2021. Its findings concluded that a digital euro might help in lowering interest rates, speeding up transaction processes and decreasing cash usage in the region.
Despite the findings on its numerous benefits, central bankers globally are facing an uphill battle to win over the public regarding CBDCs. Research conducted by the UK economic affairs committee in collaboration with Germany’s central bank has also shown that the majority of respondents have opposed a government-backed digital currency citing scepticism of benefits and even fears of government snooping.
However, official interest in CBDCs globally has taken off as Kenya’s central bank most recently sought public input around a digital shilling, while Thailand has even begun implementing regulation for a future retail CBDC. Meanwhile, the Central Bank of the Bahamas was one of the first that had rolled out a CBDC called the Sand Dollar, back in October 2020.
Amid the thrill around CBDCs, however, China has maintained the first-mover advantage, with the country outstripping the international community owing to its significant leaps forward in the CBDC space despite a crackdown on cryptocurrencies.