The initiative by the ECB to seek public participation means that the digital euro if developed, will not be used only by banks.
As more institutions dive into the crypto space offering different types of tokens, central banks and governments are striving to ensure that they are not left behind. The President of the European Central Bank (ECB) Christine Lagarde on November 1 announced an ECB survey. This survey by the European Central Bank seeks public opinion on the issuance of a digital euro. The move indicates that the central bank is now considering a retail central bank digital currency (CBDC).
The move to seek public participation means that the digital euro if developed, will not be used only between banks. Inter-bank usage would represent a deep change in the way that finance works according to researchers. One of the questions in this survey is: “Do Europeans want a digital euro that does not rely on intermediaries?”
We’ve started exploring the possibility of launching a digital euro. As Europeans are increasingly turning to digital in the ways they spend, save and invest, we should be prepared to issue a digital euro, if needed. I’m also keen to hear your views on it https://t.co/0ZuU2ZZgCp pic.twitter.com/CoY5sN7Yoz
— Christine Lagarde (@Lagarde) November 1, 2020
The Survey
The ECB President formerly headed the International Monetary Fund (IMF) She said in a subsequent publication that this survey means that Europeans and consumers can express their preferences. They will also have a chance to say whether they are ready for a digital euro and whether they are happy to use it similarly to a banknote or coin. She explained:
“We want to know whether people will be happy knowing that it is central bank money that is available and that they can rely upon. We are still in the review and consideration stage.”
This survey needs respondents to rank their preferences for a digital euro and also answer various questions like:
“What services, functionalities or use cases do you think are feasible and should be considered when developing a digital euro?”
European Central Bank Studies Possible Approaches for Digital Euro
The European Central Bank’s survey describes two possible approaches for the development and operation of a digital euro. The currency may need intermediaries to process the payment or in another approach, it might not need intermediaries.
In the first scenario, the central bank describes a digital euro that does not need the central bank or any other intermediary to get involved in the processing of all transactions and payments. That would feel similar to cash payments but in a digital form. Users can transact in the digital form of the euro even when they are offline; and their data and privacy would be better protected.
In the second scenario, intermediaries may record all the transactions. Thus, the first approach takes ideas out of the crypto’s book with coins like bitcoin built to end reliance on intermediaries.
Lagarde’s comments reiterate what the head of the Innovation Hub at the Bank for International Settlements, Benoit Couere said in a recent opinion piece. Such an agreement of opinions supports the conversations of the possibility of a retail CBDC being launched in the future.
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