Is the digital euro coming soon? Central bank starts test phase

Europe’s monetary authorities are intensifying their work on a digital euro. “People in Europe are paying, saving and investing more and more electronically. Our task is to secure trust in our currency. That is why we have to ensure that the euro is prepared for the digital age,” said the President of the European Central Bank (ECB), Christine Lagarde, on Friday, according to a statement. “We should be prepared to introduce a digital euro should this become necessary.”

Technically, a digital euro would be similar to Bitcoin. But unlike the cryptocurrency, it would be under the supervision of a central bank. Digital currencies work on the basis of a so-called blockchain – i.e. a chain of data blocks that expands with each transaction. Such a euro would exist as a digital unit and be available for online business.

ECB wants to interview citizens

The ECB said that such an electronic form of central bank money could be used by the general public – just like cash, only in digital form. So far, however, the Governing Council has not taken a decision to issue a digital euro.

An exchange with citizens, academics, the financial sector and authorities is now planned in order to weigh up the advantages and disadvantages of a digital euro. A public consultation process will be launched on October 12th. The ECB announced that the test phase will begin at the same time, regardless of the final decision.