European CBDC Prototype, the Digital Euro, Slated for October
Digitization of finance is spreading rapidly across Europe, with the concept of Central Bank Digital Currencies (CBDCs) at the forefront of this technological revolution. From Ireland to Spain, the discussion of digital currencies is becoming increasingly prevalent.
## The Digital Euro: Prototype Slated for 2023
As a member of the Eurozone, Ireland is collaborating closely with other member countries, such as Spain, France, and Italy, to explore the potential and implications of issuing a digital euro. The European Central Bank (ECB), the primary authority behind the creation of the digital euro, is leveraging the resources and expertise of individual Eurozone nations to develop both retail and wholesale versions of the currency.
> “The euro is the most tangible symbol of European integration. It is highly valued and trusted by citizens. We look forward to continuing working together with other EU institutions towards a digital euro to ensure our currency is fit for the digital age,” said ECB President Christine Lagarde.
Spain has been proactive in its approach to the digital euro, with Banco de España outlining a strategic plan to explore its potential impacts on Spain’s economy and financial systems. Fabio Panetta, a member of the Executive Board of the European Central Bank, emphasized the importance of making the digital euro accessible “just like cash.”
A successful test run of the digital euro involving the Estonian Central Bank, the ECB, and other Eurozone nations showcased its astounding processing capabilities, handling 300,000 transactions per second, each taking less than two seconds.
Meanwhile, the Bank of France has been actively involved in testing the potential for a digital euro, successfully issuing and settling digital bonds via blockchain. Collaborations with Société Générale Forge and the European Investment Bank aim to create a functional prototype by autumn 2023.
## CBDC Europe: The Digital Revolution Begins
Andorra and Montenegro have also joined the wave of CBDC adoption. Andorra announced a “Digital Assets Bill” in 2022 to regulate digital assets and develop a national CBDC, while Montenegro plans to test a CBDC prototype in collaboration with Ripple in 2023.
Italy, Austria, and Germany are actively researching and experimenting with CBDCs. Germany, in particular, is cautious and meticulously assessing the benefits, downsides, and risks. However, the country’s banking industry recognizes the potential of a digital euro for future monetary sovereignty and digital development.
A study on consumer payment attitudes in the Euro area revealed a significant decrease in cash payments at point-of-sale (POS) terminals, with a rise in card payments. This shift emphasizes the need for digital payment solutions like CBDCs.
Sweden has concluded the third phase of its e-krona project, focusing on governance and programmability. Norway’s central bank expects to conclude its CBDC experiments soon.
Estonia, Finland, and Lithuania have expressed support for the ECB’s digital euro efforts. Lithuania has even issued LBCOIN, the world’s first blockchain-based digital collector coin.
## Upgrading the Current Financial System
While enthusiasm for CBDCs is widespread, some European nations remain skeptical. The Swiss National Bank (SNB) questions the benefits of a national CBDC, stating that there is “no compelling advantage” to its issuance. However, the SNB actively participates in cross-border CBDC projects.
The Netherlands is leading the way in research and development, completing the first phase of its exploratory process and setting plans for the creation of a digital euro in the coming years. Denmark, on the other hand, believes its existing digitized system makes a retail CBDC unnecessary. The Czech National Bank sees more value in upgrading its current payments infrastructure.
The growing consensus on the potential of CBDCs lies in their ability to revolutionize monetary transactions, enhance security, and enable faster cross-border payments. However, the path toward a common digital currency is complex and full of challenges that are just beginning to unfold.
## Editor Notes
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