FRANKFURT, Germany – Marking its 25th anniversary on Wednesday, the European Central Bank is preparing a proposal for a digital version of the euro, responding to pressure to develop technology that could transform the world in the future. May change the way money is used.
ECB President Christine Lagarde says the digital euro could provide a way for people to buy things without relying on payment services controlled by non-European companies. These may include Mastercard, Visa, Apple Pay, and Google Pay.
The European Commission, the EU’s executive arm, is expected to come up with a proposal on the issue in the coming weeks, said officials at the ECB, which in turn will publish its own proposal in October.
Central banks around the world, including the US Federal Reserve, are now carefully studying the possibility of issuing digital currencies as many payments are made electronically rather than in cash. Some smaller economies such as Nigeria, the Bahamas and Jamaica are already using digital currencies, and China is on trial.
Central banks are also responding to the rise of cryptocurrencies, which has fueled fears that people will turn to rival types of digital money capable of being differentiated from national currencies.
A central bank-backed digital currency would be a safer and more stable form of payment than cryptocurrencies, which are more volatile and whose collapse in recent months has prompted calls for more regulation. The European Union became a world leader when last week it gave final approval to rules to regulate the crypto sector.
As Europe considers issuing a digital euro, the big question is: how will it improve upon what is already available to consumers?
“No one can answer this question, not even the ECB,” said Philipp Sandner, director of the Blockchain Center at the Frankfurt School of Finance and Business Administration.
“As a user, I would ask myself, ‘What’s the benefit, why do we need another solution?'”
For example, Apple Pay allows people to pay with the touch of their cell phone, an easy experience that the digital euro should emulate.
“It should be as easy to use as Apple Pay or MasterCard, and it’s harder. Otherwise, nobody will use it,” Sandner said.