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ECB Announces Plans to Introduce the Digital Euro


Posted: Thursday, October 8th, 2020

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The European Central Bank (ECB) announced its plans to introduce a digital Euro. In fact, it went further than simply making an announcement – it applied for the digital Euro trademark.

For the first time, the ECB appears like the most proactive central bank in the developed world. Since Christine Lagarde took over the ECB’s Presidency last year, she stirred the bank towards ESG, green policies, and now, digitalization.

Digital Euro

Why the Need for a Digital Euro?

How about easier payments, more secure, and faster ones? However, these are only some of the benefits of a digital currency.

As signaled by the European Commission under the Von Der Leyen’s presidency, Europe heads towards a digital era. Therefore, the steps taken by the ECB are in preparation for the European digitalization.

What if people no longer prefer cash? Well, the digital Euro will be ready to assume that role.

Moreover, a digital Euro also acts as a safety net for financial stability in the Euro area. More precisely, instead of people turning away and use foreign digital payments method, why not use one that is already available, backed by the full faith of the ECB, and safe?

Is the Digital Euro a Threat to Bitcoin?

Definitely!

What Bitcoin (and other digital forms of payments that exist today) lacks is the legislation and government-backed trust that comes with the fiat currencies. One may argue here that this is precisely the reason why Bitcoin was created – to reduce the power of governments and central banks to debase a currency.

But, in fact, the reality begs to differ. What is the intrinsic value of Bitcoin at this point? Can one use Bitcoin and pay at the local coffee shop? Can one trust Bitcoin be keeping its value in time? Or can one use Bitcoin to pay taxes? As long as the answers to these questions are overwhelmingly negative, a digital Euro as an alternative to the fiat currency makes all the sense in the world.

Once again, the steps taken by the ECB are only preparatory ones. In essence, the ECB prepares to issue a version of cash that will exist digitally.

Digitalization changed the way we do business and live our lives. Nowadays, we simply use the smartphone or smartwatch to pay for goods and services. With the introduction of the digital Euro, the ECB just prepares for even more changes in digitalization adoption trends.

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