The European Commission (EC) has announced that a bill for a digital euro will be proposed in 2023.
As first reported by Politico, EC finance chief Mairead McGuinness officially disclosed the European Union’s formal consideration of digital euro legislation at a fintech conference on Wednesday.
“Our goal is to table legislation in early 2023,” the commissioner for financial service said. “A targeted legislative consultation in the coming weeks.”
The European Central Bank (ECB) is already experimenting with designs and systems for a digital euro, with a prototype expected sometime in late-2023. If a digital euro is to be implemented, it will require the seal of approval from Eurozone governors. If they give the green light, then the digital euro could be ready for issuance by 2025.
The digital euro is a central bank digital currency (CBDC) — a financial instrument that central banks around the world are exploring very seriously. The increased interest in CBDC’s has emerged from growing concerns that domestic currencies will eventually be undermined by the growing popularity of cryptocurrencies.
“If we don’t satisfy this demand, then others will do it,” ECB Executive Board Member Fabio Panetta said in mid-November, pushing for the implementation of a digital euro.
Last year, the ECB conducted research and published a report on digital currencies. It found that a digital euro may help lower interest rates, speed up transaction processes and decrease cash use.
Irrespective of the reported benefits, central bankers face an uphill battle to win over the public. Research conducted by the United Kingdom Economic Affairs Committee and Germany’s central bank shows that the majority of respondents oppose government-backed digital currencies, citing skepticism of benefits and fears of government snooping.
But official interest in CBDCs around the world has taken off with Kenya’s central bank recently seeking public input around a digital shilling, while Thailand has already begun implementing regulation for a future retail CBDC. The Central Bank of the Bahamas was one of the first to roll out a CBDC, the Sand Dollar, in October 2020.
China, however, maintains the first-mover advantage in the world of digital currency. The country has outstripped the international community with continued and significant leaps forward in the CBDC space.