European Central Bank Begins Public Consultation for CBDC
In the past month, the European Central Bank (ECB) has become one of the top institutions in the world in regard to research about a Central Bank Digital Currency (CBDC). As the agency is interested in issuing a digital currency as quickly as possible, it is also taking its stakeholders along this journey to keep them updated. A public consultation had been officially launched by the ECB earlier this week regarding the prospective digital asset. An official document relating to the matter showed that ECB believes that a potential digital euro could be used for complementing the traditional cash and even some of the other digital payment methods for improving the payment infrastructure of the continent.
The purpose of the consultation paper is to obtain insights on the digital asset from non-governmental organizations, trade unions, academic organizations, companies and individuals within the Eurozone. It comprises of a survey where views can be recorded by the participants and they can also share their thoughts about what a digital euro should be. It was outlined in the paper that the ECB is working on a digital asset that would provide the Eurozone with ‘strategic autonomy’. Essentially, it could act as an alternative to the numerous digital payment services that are available nowadays.
This is certainly a benefit because these services could undermine financial stability and monetary sovereignty on the continent. Apart from that, the ECB’s goal is to develop a digital asset that would be functional in down periods, such as electricity outages, natural disasters and more. The Bank of Japan had also submitted a similar proposal last week. It had explained in its submission that they were working on developing an asset that could be operated during times of ‘Force Majeure’. As far as the ECB is concerned, it has asked several questions in the survey and the participants are also asked to rank whether they believe a digital euro should be their top priority or not.
Some of the options giving to the rankings include privacy, ease of use, payment security, and access from any part of the Eurozone. In addition, the ECB has also asked the participants to highlight any specific challenges they believe would arise and could stifle their ability of using a CBDC. Apart from that, the respondents have also been requested to propose measures for ensuring quick adoption throughout the continent, especially for the unbanked population or for those with disabilities.
The last choice is where participants have to choose between a digital euro operated by a central body that processes all payments and a digital euro that lets multiple intermediaries perform this function. This consultation is possibly a precursor to a detailed study that ECB will eventually conduct into a digital euro. It was confirmed by the body last week that they would start studies into the asset next year, which is at the same time as the filing made by the Bank of Japan. A digital euro has already seen a lot of support throughout the continent.