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