The European Central Bank (ECB) has just launched a public consultation regarding “Digital Euro”. The main purpose of this consultation is to conduct experiments to see whether there is a need to create Digital Euro for the 19-nation currency club or not. It is believed that this move by ECB is coming as an aftermath of the COVID-19 pandemic. Most of the people tend to adopt for cashless payments in order to reduce the spread of the virus. People are moving towards private cryptocurrencies like Bitcoin and that is why the policymakers are concerned about creating their own central based digital currency (CBDC).
Digital Euro Will Be Legal Tender and Guaranteed by ECB
Digital Euro, which will be the electronic version of Euro, will be a legal tender and guaranteed by the ECB. Through this, the users will be able to deposit their funds directly with the central bank adding an additional security that is not there with the commercial banks.
With introducing Digital Euro, people will be able to store their money in a digital wallet which will make the payments highly secure, fast and convenient. ECB has mentioned all these points in the report they published in October. According to them, Digital Euro will compliment cash and not complicate it. Even though Digital Euro will be highly centralized but it will still be based on blockchain to facilitate the transfers.
Central Banks Around the World are Considering Digital Currency
During this COVID-19 pandemic, people from most of the countries are trying to avoid cash payments due to which there has been huge interest in digital currencies. Central banks around the world seem highly interested in Digital Currency and are aiming to launch for their countries. Along with holding discussions regarding issuance of Digital Euro, ECB is also aiming to cover the anti-money laundering aspect. The bank is quite concerned about its privacy and aiming to make sure that Digital Euro cannot be used for money laundering.