The Bank of Spain underscores that traditional physical currency is ill-suited to exploit the advantages presented by the increasing digitization of the economy
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In a move that aligns with the ongoing shift towards digital currencies in Europe, Banco de España, the central bank of Spain, has joined a growing chorus of European financial institutions to inform its customers about the potential advantages of a digital Euro. On October 19, the central bank issued a statement detailing the nature and uses of the European Union's Central Bank Digital Currency (CBDC).
The Bank of Spain underscores that traditional physical currency is ill-suited to exploit the advantages presented by the increasing digitization of the economy. In contrast, the digital Euro will play a pivotal role in the financial system by enabling electronic payments.
One key highlight in the bank's statement is the prospect of conducting offline payments using the digital Euro. Notably, digital currency is lauded for offering a level of privacy equivalent to that of physical cash. The authors of the statement also assure users that, in its online form, their transaction data will remain visible solely to their respective financial institutions and not to the CBDC infrastructure provider, Eurosystem.
As per the project calendar disclosed in the statement, the current "preparation phase" commenced on October 18 and is projected to conclude by 2025. This phase will focus on finalising the regulatory framework for the digital currency while also selecting the banks that will issue the digital Euro. However, a final decision regarding the issuance of a pan-European CBDC is yet to be reached.
The Bank of Finland also expressed a favourable view of the digital Euro, with one of its board members, Tuomas Välimäki, describing it as "the most topical project" in the European payment sector.
On October 25, the European Central Bank (ECB) shared a link to a landing page containing information about the digital Euro. It suggests that digital Euro could "simplify life" and strengthen the European financial landscape.
The future of the digital Euro in Europe appears to be taking shape, with central banks actively exploring the possibilities of a digital future.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash