The European Central Bank (ECB) would be considering the possibility of issuing its own digital Euro if the private sector fails to guarantee a convenient changeover for cross-border payments. The news was published by Bloomberg on December 4.
Jumping on the CBDC Ship
The European Central Bank has joined the group of several central banks who wish to issue their digital currency, a tool known as central bank digital currency (CBDC). According to reports directly from the ECB, the innovations in the European retail payments are failing and this would be the main reason why the central bank would be pushed to launch this new solution.
The goal is to create a payment system that is fast, secure and reliable while also increasing Euro’s trust.
In order to achieve its goal, the central bank still has to solve some small issues. The CBDC would give access to the general public to ECB funds,while also having consequences on the monetary policies to be implemented.
However, it remains to be seen how this solution can be created. Central banks, or government agencies in general, have little technical knowledge and the production of such a solution could be beyond their reach. This is underlined by the central bank itself, taking as an example the current SEPA payment system as a fragmented solution in terms of graphics and user experience.
The most obvious path would be to support private companies that try to develop this new payment infrastructure. According to the ECB, this initiative should satisfy five key objectives: full pan-European reach and seamless customer experience; convenience and cost efficiency; safety and security; European identity and governance; and, in the long run, global acceptance.
A Solution Is There, Why Not Use It?
The European central bank is among the latest to have expressed interest in CBDC.
The People’s Bank of China, the Rwandan Central Bank, the Central Bank of Bahamas, the Bank of Japan and many others are also evaluating this possibility. All seem intent on wanting to create a better payment system that is fast, secure and reliable. However, if they could renounce a fundamental characteristic of fiat currencies – that is total control over the management of money – central banks and governments could devote themselves to developing the only true global currency we have today: Bitcoin.