The European Central Bank is moving to the next stage of its central bank digital currency (CBDC) project. The adoption of CBDCs is rising as more central banks globally are investigating or actively developing them.
ECB Launches Investigation Phase of The Digital Euro
The European Central Bank (ECB) took a major step forward yesterday after it announced the start of its next stage in the development of the Digital Euro. The next stage, dubbed the “investigation phase,” could ultimately lead to the development of the Digital Euro by 2025.
According to a Bloomberg report, the investigation phase is expected to take 24 months and intends to address crucial issues on design and distribution. The ECB said the findings from the investigation phase would not prejudge any future decision on the possible development and issuance of the digital Euro as the European apex bank will make the decision later on.
Executive Board member Fabio Panetta confirmed that the digital Euro would complement cash and not replace it. Panetta added that after the investigation phase, the ECB would move to the implementation stage, which would take roughly three years.
The ECB, led by Christine Lagarde, already favors the development of the digital Euro. According to some ECB officials, CBDCs would portray a payment system that is fast, easy to use, and secure.
Would CBDCs Offer Alternatives To Cryptocurrencies?
Christine Lagarde isn’t a fan of cryptocurrencies like Bitcoin and has suggested that the development of CBDCs would offer people an alternative to the cryptos. However, some analysts believe that cryptocurrencies would still be around even after CBDCs come into existence.
Cryptos have become more of an asset than currencies, though they serve both functions. Bitcoin’s price surged by as much as 100% at some point this year. The increase in value seen with cryptocurrencies is not available with fiat currencies.
The major competition to CBDCs would be stablecoins. They are digital currencies whose values are tied 1:1 with fiat currencies like the USD or EUR.
Bitcoin continues to struggle below the $35k mark, with the leading cryptocurrency’s price down by nearly 50% from its all-time high of roughly $65k.