[NEW] European Central Bank to move digital euro plan to preparatory stage from next month

On the 18th, the European Central Bank (ECB) announced that the Digital Euro Project will move to the next phase from next month 1st. The project will move from the research phase to the preparation phase for issuance, which will take two years, in order to issue the digital euro, the EU's CBDC (central bank digital currency).

The Digital Euro Project will begin in October 2021. The ECB is designing a digital euro that will be widely accessible to citizens and businesses through circulation at banks and other intermediary institutions.

This design envisions that the digital euro can be used for all payments throughout the eurozone. It is basically free to use and can be used both online and offline.

According to the report, the digital euro will maintain the highest level of security in terms of privacy. In addition to being able to make payments easily and instantly, it can be used between individuals, in sales, electronic goods transactions, and in government transactions.

The next phase of the Digital Euro Project, the preparation phase, will begin on November 1st. The following will be implemented in the preparation phase.

1. Finalize the basic rules for the digital euro
2. Select a provider to develop the digital euro platform and infrastructure
3. Develop and test a digital euro that meets both the system requirements and user demand in terms of user experience, privacy, financial inclusion, etc.

After completing all requirements in a two-year period, the ECB Governing Council will decide whether to proceed to the next preparation stage. The ECB will adjust the design of the digital euro based on the results of the legislative deliberations.

European Central Bank President Christine Lagarde said, "We need to prepare currency for the future. We envision the digital euro as a digital form of cash that can be used for all digital payments free of charge and meets the highest privacy standards. It will coexist with physical cash, be available at any time, and leave no one behind."

The issue with the digital euro is the protection of personal data. The Eurosystem will not view users' personal data or disclose payment information to individuals. The digital euro will achieve the same level of privacy protection as cash for offline payments.

To use the digital euro, it will be possible to use a dedicated app from a payment service provider or a dedicated digital euro app provided by the euro. He also explained that even people who are not good at using digital apps will be able to use the digital euro by using cards provided by public institutions such as the post office.

In addition, as with other electronic payments, there will be incentives for intermediaries and sellers to be compensated, and measures are being considered to prevent sellers from incurring excessive service fees. He said that the costs of managing and processing the digital euro will essentially be borne by the European Central Bank.

Looking around the world, some countries and regions have already issued CBDCs, but they are not widespread around the world. Among economic superpowers, China has been leading the way in research and development of a digital yuan, but at this point it is unclear when it will be officially issued. Therefore, if the digital euro is developed as it is, it could be the first CBDC to be used in a large economic zone.

Note that even if the issuance preparation phase is completed, the digital euro will not be issued immediately. The formal issuance procedures must be carried out and approved by the European Council.

Reference:Announcement,report
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