Spain gives the go-ahead to the digital euro
The Bank of Spain (BdE) has communicated its support for the digital euro project, shortly after the European Central Bank (ECB) announced its plans to move towards a new phase in the development of the new electronic money.
The digital euro is what is known as a CBDC (Central Bank Digital Currency), i.e. a digital currency managed and supervised by a central bank, in this case, the European Central Bank (ECB). It can be used by individuals and businesses and, at least in principle, should not replace but complement cash.
Although the issuance of a digital euro is not a certainty, after two years of a preliminary study on the possible introduction of the new digital currency, last Wednesday the European institution gave its officials the green light to move on to the next phase of the project. With the publication of a report on the design and distribution of the European CBDC, the ECB announced that it wanted to “start laying the groundwork for the possible issuance of a digital euro” as of 1 November.
This second phase is expected to last approximately two years, until 2025. During this preparation period, the regulatory code and the selection of suppliers to develop the platform and infrastructure will be finalised. According to the ECB, this phase will also serve to “pave the way for a possible future decision on the issuance of a digital euro.
The Bank of Spain takes a stance in favour of the digital euro
After the European Central Bank (ECB) announced the second phase of the project, the Bank of Spain (BdE) issued a statement highlighting what it considers to be the advantages of CBDC and giving its support to the ECB. Juan Ayuso, Director General of Operations, Markets and Payment Systems at the Bank of Spain, said that the digital euro retains the advantages of the physical currency.
The bank argues that the physical cash format “does not allow taking advantage of all the benefits offered by the increasing digitalisation of the economy and society”. A contentious point between proponents and critics of CBDCs, who argue that centralised digital currencies cannot guarantee the anonymity offered by cash transactions. As Christine Lagarde, president of the European Central Bank, admitted, “Total anonymity – such as that offered by cash – does not seem a viable option”.
On the other hand, Josep Borrell, vice-president of the European Commission, stated that we don’t have to worry about our privacy and data protection because “personal data would be fully protected. Banks, not even the ECB, would not see or be able to track people’s personal data or details. Offline payments would offer a similar level of privacy as cash does today.
To reassure the public and consumer associations, the European Commission and the European Central Bank presented a package of legislative proposals last June to convince the European Parliament and the EU Council to support the launch of the digital euro. The European authorities justify the need for CBDC because more and more citizens – 55% according to their surveys – prefer to pay by electronic means.
Even so, Javier Rupérez, president of the Denaria platform that supports the use of cash, reacted to the ECB’s announcement by pointing out that, although he believes that the digital euro could be an accessible means of payment that “will coexist with physical money, there are still no firm guarantees to ensure this coexistence“.
It remains to be seen whether CBDCs will be able to guarantee the concepts of privacy, anonymity and freedom that we now have with physical money and cryptocurrencies, but the debate is on, and it seems that the digital euro is getting closer and closer.
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