European Union will propose a bill for a digital euro in 2023


Politico is first to report on an
announcement where the European Union’s finance chief Mairead McGuinness officially
declared on Wednesday at a fintech conference about the European Union’s formal
consideration of preparing a bill for a Digital Euro in the early year 2023.
With this bill, the European Central Bank
will have a legal foundation for the development of a virtual euro banknote or
coin. EU's version of a central bank digital currency (CBDC) will be the
digital euro which is a financial instrument. CBDCs serve as digital versions
of fiat currencies (such as the euro or U.S. dollar), backed by central banks.
Here a digital version of the euro will be issued by European Central Bank.
"Our goal is to table legislation in
early 2023,” the Commissioner for Financial Service said. “A targeted
legislative consultation in the coming weeks."
It is expected that a prototype of a
digital euro will be ready by late-2023, with in-house experiments already
being done on designs and systems by the European Central Bank (ECB). To
implement digital euro, a seal of approval from Eurozone governors is required.
They could issue the digital euro by 2025 if get approved. Before it becomes
law, negotiations will be done for the bill within EU capitals and Parliament
Last year European Central Bank did
research on the benefits of a digital euro and published a report on digital
currencies. They found that it can reduce bank's interest rates speed up the
transactions process making it much smoother and faster thereby lowering the
use of cash. Referring to the benefits of a digital euro, the European Central
Bank's president, Christine Lagarde, said that in addition to traditional cash,
a European CBDC could be used as an alternative to private digital currency
like Bitcoin.
Other countries issuing a CBDC:
In 2020, Bahamas has launched its Sand
Dollar. China is still working on electric Chinese yuan- CNY. Federal Reserve
in the United States is researching the technology. Although it is still
working on whether to release one and focussing more on regulating stable
coins.
On the other hand, the UK economic affairs
committee and Germany’s central bank perform research on digital currency and
found that most of the respondents were against government-backed digital
currencies citing.

Indrani bose
CBW - External Analyst
INDIA