The European Central Bank (ECB) has officially entered the "preparatory phase" for the digital euro project after a two-year investigation. According to an announcement on October 18, the ECB will begin "laying the foundations for a possible digital euro" from November 1, emphasizing that the issuance of a central bank digital currency (CBDC) is not yet a certainty. This development comes following the release of a 44-page report detailing the potential design and issuance of a digital euro.
The preparatory phase is expected to last for two years, with a primary focus on finalizing the rules governing the digital currency and identifying potential issuers. Subsequent phases will involve "testing and experimentation" driven by user feedback and central bank requirements. The ECB has clarified that the decision to proceed to the next stage, which would pave the way for the potential issuance and launch of a digital euro, will be determined in two years. Importantly, this will only occur once the EU legislative process has concluded.
In June, the European Commission proposed legislative plans that would enable users to access CBDC through traditional banks. ECB executive board member Fabio Panetta has emphasized his vision for a digital euro that coexists with physical cash, incorporating strong privacy features.
Recent controversies involving European Central Bank President Christine Lagarde have stirred discussions within the cryptocurrency community. Critics took issue with her statements suggesting that a digital euro could potentially enable the control of user payments, made during a prank video where she mistakenly believed she was conversing with Ukrainian President Volodymyr Zelensky. The rollout of a digital euro, expected to gain regulatory and policy attention, will likely be a key issue, especially with European Parliament elections approaching in June 2024.
