The European Central Bank (ECB) can start developing its digital euro, an electronic version of banknotes and coins, by the end of next year, ECB board member Fabio Panetta said on Monday.
“At the end of 2023, we could decide to start the implementation phase to develop and test the appropriate technical solutions and business arrangements needed to secure the digital euro,” Panetta said. “This phase could take three years.”
What is the digital euro?
The digital euro would be like euro banknotes but in digital form. If implemented, the project would be an electronic form of money issued by the Eurosystem (the ECB and the National Central Banks of the Eurozone) and would be accessible to all citizens and businesses.
The digital euro cannot replace cash, but rather will supplement it. The Eurosystem will continue to ensure access to cash for all citizens throughout the euro area.
Is the digital euro a crypto asset?
No, the digital euro is not a crypto asset. The digital euro is central bank money. This means that the Central Bank will stand behind it, it will be designed to meet the needs of citizens, it will be risk-free and it will respect privacy and data protection. Central banks have the task of maintaining the value of money, whether in physical or digital form.
The stability and reliability of so-called “stablecoins” ultimately depend on who issues them and the reliability and enforceability of the issuer’s promise to maintain their value over time. Private issuers may also use personal data for commercial purposes.
There is no clearly defined person responsible for the cryptocurrencies, which means that the claims cannot be enforced.
Lagarde confirmed that the ECB could raise interest rates in July
The ECB will raise its interest rate for the first time in more than a decade in an attempt to normalize monetary policy
European Central Bank Governor Christine Lagarde reaffirmed markets’ expectations of rising interest rates in July. She clarified that the increase could follow “weeks” after the ECB stopped buying bonds under the APP Bank program.
“We have not determined exactly how long it has been, but I was very clear that this could mean a period of just a few weeks,” Lagarde said in a speech in the Slovenian capital, Ljubljana.
The ECB will raise its interest rate for the first time in more than a decade in a bid to gradually normalize monetary policy after record-high inflation in the eurozone.
The governor of the German Central Bank (Bundesbank) Joachim Nagel commented that he would support a rise in the key interest rate in July and was adamant that action should be taken against the backdrop of accelerating inflation.
According to him, the more inflationary pressure expands, the greater the need for a sharp rise in interest rates.
The US Federal Reserve and the Bank of England have already tightened monetary policy, while the ECB has not increased the price of loans since 2011.
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