The European Central Bank (ECB) emphasizes the significance of a digital euro by introducing a digital euro project competing with U.S. dollar-backed cryptocurrencies.
The project aims to enhance secure payments in the eurozone and reduce reliance on non-European providers by introducing digital central bank money. A decision on the project’s future is expected by 2025, and it seeks to complement physical cash, as reported by CCN.
An ECB board member, Piero Cipollone, highlighted the urgent need for a digital euro due to the global rise of stablecoins. He noted that U.S. President Trump’s executive order promoting dollar-backed stablecoins could attract customers away from traditional banks, highlighting the need to protect Europe’s financial autonomy.
“Stablecoins, akin to money market funds, offer exposure to short-term rates in currencies like the dollar.”
Cipollone explained,
“In contrast, a digital euro would serve as an ECB-backed online wallet. It would allow payments even for non-bank customers, with capped, non-remunerated holdings,”
The ECB launched a two-year preparatory phase for the digital euro on November 1, 2023. By October 2024, the first draft of the rulebook was completed, and the ECB is now refining it based on user feedback and input from vulnerable groups. They plan to finalize the procurement process for the digital euro infrastructure by 2025, with a report on developments expected by July 2025. The initiative is intended to strengthen monetary sovereignty, boost competition in payment services, and reduce reliance on foreign providers.
Notably, Italy’s largest bank, Intesa Sanpaolo, recently acquired $1 million in Bitcoin, signalling a shift in the European banking landscape despite regulatory criticism of digital assets. This move may prompt other banks to follow suit. Upcoming discussions by the ECB’s Euro Retail Payments Board (ERPB) in the second quarter of 2025 will focus on the risks and opportunities for payment service providers influencing the implementation of the digital euro.
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